First multifamily deal

[Michael Hodde]

Investment Info:

Small multi-family (2-4 units) buy & hold investment.

Purchase price: $190,000
Cash invested: $60,000

Cashflowing Duplex with potential to convert to Triplex

What made you interested in investing in this type of deal?

I've seen others do well starting out with small multifamily deals and this particular one was a low cost entry point with a decent COC return given the market and we knew getting the first deal under our belt was hugely important.

How did you find this deal and how did you negotiate it?

Found it listed on the MLS. Negotiated 9k off asking and an additional 2k in closing costs through our agent and the home then appraised for $14k over the sales price.

How did you finance this deal?

Personal money for 20% down, traditional financing for the rest.

How did you add value to the deal?

So far we've only fixed up the necessities that were neglected by the prior landlord, however one of the tenants should be out by end of February, 2024 so we will be updating the unit which should allow us to raise rent from current $1200 to ~$1500. Also, there's a large open attic space which has the potential to be turned into a smaller 1/1 third unit, but we'll need to work with the city on zoning.

What was the outcome?

As a first time investment, it's been good for us, and until we lose the one tenant to renovate, it has thus been bringing in about 8-9% COC.

Lessons learned? Challenges?

Learned to always look for hidden ways to add value. To continue to foster a good team. Main challenge is financing (but pushing me to learn more about creative financing)

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Yes. Agent: Collin Caldwell with FIRE realty. Lender: Movement mortgage.