First Investment Property!

[Daniel F Chernati]

Investment Info:

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

Purchase price: $166,600
Cash invested: $41,650

My first investment!

Property: 6/4 turnkey duplex with year long leases in place for both units.
Monthly Cashflow: $760

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

The private lenders and I were interested in purchasing a multifamily property as it has more room for growth and less vacancy risk. Even if one side is rented out, it comes very close to covering the PITI for the property. We are now looking at using a HELOC on this property to fund a subsequent deal.

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

This deal was found on Zillow and gathered a lot of interest. Not many properties in the Greenville, SC are can generate >1% income-expense ratio. After meeting the seller and understanding who she was, my real estate agent and I wrote a letter to her which played a significant role in her feeling comfortable passing along the property. With a few additional offers on the table and confident on the numbers, we put an escalating clause on the deal at the maximum value the numbers would work.

How did you finance this deal?

100% private lenders for downpayment. Conventional financing for mortgage.

[Daniel F Chernati]

Hey @Jacob Allen. I'm fairly new here as well. In my time analysing deals and making offers, Greenville is a very hot and competitive market. That being said, the escalating clause worked very well for me. When you put in an escalating clause as your offer, you are telling the seller you are willing to go up to "$x," PLUS another "$y." Here's an example...

The asking price of a house is $100k. I know that my numbers will work up to ~$105k and I really want this house. I know it will be a great investment. My agent and I put an escalating clause that says I am willing to go $500 higher than the highest bid, up to $105k. If the highest bid came in at $101k, I would pay $101,500. If the highest bid came in at $105k, I would pay $105,500. However, if the highest bid came in at $106k, I would be out of the running, knowing my numbers no longer work. 

Hope this helps! 

Dan