Income-producing multifamily in Biddeford by 1st-time investor

[Bennett C.]

Investment Info:

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

Purchase price: $295,000

Cash invested: $20,000

2 adjacent buildings (Single-family & Duplex). The single-family has 4 bedrooms, 1.5 baths, and a 1 bay garage and rents for $2000/mo + all utilities except water/sewer. The duplex has 1st- and 2nd-floor 3BR/1BA apartments. Unit 1 currently rents for $1300 + electricity; Unit 2 rents for $1200 + all util except water/sewer. There is a driveway that wraps around the duplex and allows for plenty of off-street parking for all tenants and some guests.

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

I wanted to own a property that would pay my mortgage while my girlfriend was in college in the area and could become an income property after we moved on. This turned out to be the case as the unit we moved out of has been rented for $2000/mo ever since, which goes straight to the bottom line.

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

We looked at probably 10 multis in Biddeford and Saco, but this one stood out because it would allow us to owner-occupy a single family home while enjoying the incoming rents of the duplex next door without sharing walls. The property we purchased had been listed for $325k about 45 days before and had been incrementally reduced. We offered $275K, they came back at $295K, and I accepted because I saw the cash-flow offsetting that $20K difference in only a few months.

How did you finance this deal?

FHA

What was the outcome?

When I purchased the property with FHA financing in 2016 the duplex was collecting $1200 and $1000 with everything included and single-family was vacant. In just over two years, with only moderate sweat-equity while I owner-occupied, all the units have been turned over to higher rents and more tenant-paid utilities.

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

Jay Weinberg of Portland's Coldwell Banker agency. Recommend for multifamily buyers as he has a couple of his own and has a strong understanding of the differences between buying a dream home and a cash-flowing rental. He also manages the property for me @ 7%/mo.