First Investment Property

[Devin Pietz]

Hey BP! First post here, but I wanted to share my experience with my first investment property/house hack. Its a 3-family located in the Columbus Park neighborhood of Worcester, MA. Purchased completely vacant for 450K at the start of 2022, the property was solid but two of the units were in need of cosmetic rehabs.

My original plan was to move into the “turn-key” unit and rehab the other two units over the course of an estimated 6-months. However, shortly after beginning the rehabs, I realized they were going to take much longer than 6 months. I had to alter my plan by renting out the updated unit almost right away, and moving into the other units while completing the rehabs.

For better or worse, I decided to tackle the rehabs myself to gain some construction experience and learn as much as I could about the property. Since I worked my W2 as a full-time engineer, most of the work took place during nights and weekends so the rehabs took much longer than anticipated. Not to mention, I was oblivious to how much work the units actually needed as this was my first property and rehab project. With that being said, I learned a lot of lessons and skills regarding construction, material costs, and project management in general that I don’t think I could have learned anywhere else. I’ve also built relationships with reliable plumbers/electricians and other handymen who will be very helpful resources in the future.

PITI is about $3100, and current rents are Unit 3: 1br/1b $1250 and Unit 2: 2br/1b $1800. I currently live in Unit 1 but expect it to rent for $1800-$2000 when I move out. See pictures of rehab below!

Today, comparable 3-families in the area have sold for 600-650k in the last 6 month. I plan to hold the property but I expect this property to be worth at least 600k once the landscaping and other details are finished. Excited and eager to find the next one!

Purchase price: 450k

Cash Invested: 40K

What would I have done differently?

Found a way to finance construction costs into monthly payment because Unit 1 turned out to be a heavy cosmetic rehab. (New cabinets, new appliances, redesigned kitchen layout, refinished hardwood floors, some drywall replacement, all new paint, etc.)

Biggest takeaway

Most projects cost 20% more and take 20% more time than we think. I’ll take that into consideration on future projects when budgeting or analyzing a deal.

[Brian J Allen]

Great job.  It is good you were able to learn and make money.  There are contractors in Worcester that can turn something like that over in weeks so you can be collecting $ right away.  And some of the contractors will hold paper as well.  That might be worth exploring next time you have a project.