First Property Bought, Many Lessons Learned

[Joseph Crane]

Investment Info:

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

Purchase price: $107,000
Cash invested: $114,000

The duplex was built in 1902 and is a duplex up and down.

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

At this point in our investing we knew very little about income property. All we knew was that it was on a good street. We could afford it and we thought it would cashflow about $200 per unit.

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

MLS through another agent.

How did you finance this deal?

We used an FHA loan and between repairs had a little over $5000 in the deal.

How did you add value to the deal?

We butted our butts and totally redid the lower unit drywall and everything. Upstairs we painted.

What was the outcome?

We cashflow $450 per month now. However I do not even want to think about the number of man hours that we have in it.

Lessons learned? Challenges?

Do not trust a tenant that did not pay the last land lord for six months, he will not pay you either. Your time repairing your property is NOT free. Systems can make even marginal deals worth the time. For example we started to ACH their rents directly from their accounts. That was game changing. Lastly we learned the importance of getting ONLY taking good tenants.

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

Yes this was the only time we ever did because my wife became a broker right after we bout this property.