My 1st investment house hack

[Farrukh Amini]

Investment Info:

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

Purchase price: $196
Cash invested: $50,000

A compact two-family house with one 1 bed/1 bath apartment and one 2 bed/2 bath apartment and a small backyard.

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

House hack - Lived in the bigger apartment for free while renting the smaller apartment which covered 90% of my mortgage payments. Based on the population trends in the NYC surrounding areas it was clear that this location would be hot in a couple of years. The property is located within 5-10 minute walk to the main transportation hub that gets you to NYC in 15-30 minutes.

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

MLS. The property was in pretty bad shape and, in the market for 6 months. The Journal Square market was not as hot as the surrounding Downtown or Grove st neighborhoods, so all the attention of investors was elsewhere. We lived in Jersey City for about 5 years by then and knew what the population growth and trends were. The property was listed for 226k and we negotiated it down to 196 by leveraging the fact that there was no demand.

How did you finance this deal?

A traditional mortgage with 20% down.

How did you add value to the deal?

Invested cash to rehab and update the property.

What was the outcome?

The value of the property went up 50% in just 1 year (mid 2015) and 100% in two years after the purchase (2014). Ended up refinancing in 2017 with cash out and investing on another multi-family rental property in Jersey City.

Lessons learned? Challenges?

For the 1st time buyers, I'd recommend doing some research on what to look at during the inspection and going in educated. If your inspector is incompetent or doesn't care, it might cast you. I didn't know much when I purchased this property and trusted the inspector to do the due diligence, but he missed a few important signs of pipe leaks and bursts, which ended up costing me money and stress.

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

My RE agent is a rockstar and to this date we work with him. Highly recommend Steve Salzer at Keller Williams City Life of Hoboken, NJ.