House Hack turned investment property

[Derek Dickinson]

Investment Info:

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

Purchase price: $990,000
Cash invested: $350,000

Purchased this home with my former partner back in 2018 and we put 200k down. It's a 2 family home in the Ridgewood neighborhood of Queens. We purchased it with the intention of living in the Ground floor + BSMT apartment and renting the 2nd floor apartment. Initially we did a light renovation on the rental unit and a larger renovation on the 1st floor. We completely gutted and finished the basement including adding a kitchenette and 3/4 bath, moved out and are now renting both apartments.

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

As a contractor and cabinet maker it made much more sense financially to purchase a home with a rental unit and manage the property myself.

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

Found it through a broker on the market. Asking price was 1 million but was by far the best deal we had found in the same price range. Had to negotiate to 999,000 only to stay under the NYC luxury tax.

How did you finance this deal?

20% down, mortgaged the rest through a local bank

How did you add value to the deal?

Renovation work throughout both apartments, gutted and refinished the basement as well as extensive work in the private backyard. Replaced all the windows in the building, insulated the attic and redid the front stoop and cellar doors.

What was the outcome?

Currently renting both apartments for a average monthly cash flow of $1000

Lessons learned? Challenges?

Wish I had done more renovation work upfront before moving in. Wish we had done more market research before renting the 1st floor apartment to friends of ours. We priced it significantly below current market value and could probably be getting at least another 500-1000 a month more for the unit.

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

Unfortunately not.