2 Flat with Coach house. Property is located on a double lot, 50'x126'.
Unit 1 (3bd,2Ba) is a raised 1st floor with large finished basement. Owner Occupied, live in gut rehab.
Unit 2 (4D,2Ba) is second floor with finished attic. Minor cosmetic rehab
Coach house (3bd, 1 ba) is a full gut plus addition 1/2 bath and build out of Garage W/D Space.
Detached 2 door separated garage - rented out to 3rd party.

Cashflow numbers are projected after we move out

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

This is our first real estate purchase and investment. We knew that we were interested in multi unit properties from the aspect of generating additional cash flow. My work experience is in construction and we were excited to take on a larger rehab project and were not scared of some of the "Issues" with the building that scared away other investors.

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

We found the deal through a real estate agent we were working with. She had the deal fall through with another client and reached out to us to see if we would be interested. The seller was firm on price but we were able to negotiate credits for work that needed to get done. We ended up with a check for a couple hundred dollars paid to us at the closing table.

How did you finance this deal?

We financed this deal through FHA first time homebuyer program.

What was the outcome?

Most of the credits that we negotiated did get used for the CapEx projects that were needed. The largest being a new roof on the coach house. During our first month we had heavy rains and water intrusion into the basement, not alot but visible amounts under the tile. We were quoted full drain tile systems of the basement between $9,000 to $15,000. After tearing out the drywall and monitoring the crack were able to diagnose and remedy for a lot cheaper.

Lessons learned? Challenges?

The biggest challenge is inheriting tenants. The leases that we took over were well below market rate for our area. When we renewed the leases at close to but still below market rate, there was backlash and some hostility. We choose to renew the tenants because it helped ease the cost of our rehab. In retrospect we could have floated financing for a couple months without tenants and rehab costs. in the future we would have offered MTM or shorter lease terms for existing tenants.