First deal at age 24: House-hack duplex

[Tim Johnson]

I did it! I set a goal in January to complete my first investment deal by June. I set a few important milestones to hit along the way... read the entire Book on Rental Property Investing to build my confidence... narrowed down my options, made an offer, and then I had the keys on June 30. It's a duplex, I'm living in one side and renting out the other. It's been a lot of work but I am liking it so far! It hasn't burnt down yet and I'm about to receive my second rent check which is just over 2x the P&I on the whole place... for me, that's a success.

Upsides to the deal: Healthy cash return (~15%) based on BP calculator and conservative assumptions, and the actual numbers are delivering well so far. Already cash-flowing - came with a great tenant on the other side. Newer property (2008) with simple construction - should be easier to maintain for a newbie like me. Positive location factors: good side of town, walking distance to healthy and attractive downtown area and employers; at end of a cul-de-sac (no thru traffic), bordered on one side by a wide-open grass lot with large tree, good views from the front porches. Low unemployment in the area and lower than average vacancy rates.

Downsides to the deal: Although it's new, the duplex itself is otherwise not very attractive - looks like a manufactured home, not very high-quality construction. Local middle-class job market is heavily dependent on a few companies.  Negative location factors: despite upside, the neighborhood is still just a C / C+ at best, dragged down by a couple of "D" houses, one of which is right next door (although the owners are just fine). 

I pulled the trigger because in my view the benefits outweighed the negatives and it fit what I needed in terms of house hacking, simplicity, and cash return. I am sure it will cause its share of headaches in the coming years, but I feel it's a good starter property and I will learn important lessons while making good money. I may need to move for work in the near future, but I know that I can still hang onto this property and make money because I built 10% property management into the calculation. I am concerned about how to get a good tenant when the other side moves out... but that's what BP community is for.

Thanks all for reading! Welcome any questions or comments.