Duplex House Hack

[Adam Sherwood]

Investment Info:

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

Purchase price: $560,000
Cash invested: $60,000

I thank the dog next door for leading to this purchase. I got sick of it one night and told my landlord I will be moving out in 3 months. From that day I had 3 months to buy a multifamily. Originally this started as a house hack I have recently moved out and it is now a 2 unit with one half being furnished rental. I am looking into my STR options but from what I have learned this is a overflowing market in the area and the vacancy's are increasing so I may look into mid term and long term only.

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

I've been wanting to start investing and buy a property since 2020 when I graduated. I was moving a lot for work and using that as an excuse to not pull the trigger. Growing up I spent years working in all aspects of building a home from concrete to roofing. I also ran my own roofing business one summer of college. From then I knew real estate investing would be in my future.

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

I used a realtor to help me with MLS posts and find off market deals. This was posted and up for 60+ days and saw the price dropping and learned the seller was motivated. Originally posted for 100k over what the purchase price was I submitted an low offer and received a counter. From there I accepted and negotiated to have the seller cover the cost of replacing the roof.

How did you finance this deal?

I financed the deal with a conventional loan and bought down the rate from 7.75 to 6.25. After some issues with the mortgage lender not doing their due diligence until the last minute they put in some of their commission to support the closing of this property.

How did you add value to the deal?

In the side I house hacked I updated the bathroom, I installed turf in the back yard, added a large shed, and furnished the Unit. On the tenant side I replaced the breaker panel to a modern one and fully repainted the unit.

What was the outcome?

I got over the hardest hurdle as an investor, buying your first property. I learned a lot through the closing process and also as an actual landlord having to deal with issues.

Lessons learned? Challenges?

1. ALWAYS ensure the contractor walks the property with you or the realtor and a CLEAR scope of work is defined. I got screwed on the reroof pricing because they said they only priced for the unit that was called out on the offer, when that is legit half the roof.
2. Ensure your mortgage lender is requesting documents upfront early in the closing period so there is no last minute suprises
3. Stay positive and expect problems. If you have a perfect closing and first 3 months your dreaming

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

I would highly recommend Realty One, the realtor Derek helped me solve all the major issues that came up and supported me in running the numbers for different properties.
I would be cautious with MLD residential lending company.