Second Investment Property

[Janis A.]

Investment Info:

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

Purchase price: $228,000
Cash invested: $9,000

Duplex of 2 units. 3 bdrms, 1 bath each unit. Private fenced in back yards, pets allowed, AC wall unit.

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

I began an interest in real estate investing a few years before this purchase. I spent about 8 months looking at single family homes and multi family homes that would meet the numbers to make a profit and charge reasonable rent that I could afford to live in for the first year.

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

Real estate agent. There was some negotiating because they had to do things like put in working heaters and the roof needed to be replaced.

How did you finance this deal?

FHA loan.

How did you add value to the deal?

Installed a new roof, hired an exterminator, beginning to do repairs and upkeep like replacing fence and AC units.

What was the outcome?

One side has an inherited tenant who now pays the rental price I had in mind and I live in the other unit currently.

Lessons learned? Challenges?

I learned that you inherit leases with the house. I assumed that they would be moot or expired or something once a house was sold...not so. Therefore the tenant paid 1999 year rent rather than 2018 rent for 7 months--so strapped for cash a little those months! Then I upped the rental price to account for the current house price (2.25x what the last owner paid), along with 5% each for vacancy, repair, and maintenance, property management fees, and profit.

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

Ford Real Estate in Medford, with Mike Hilare. Mike was great, the company was great. They were recommended to me by Kelsey Plummer who is a real estate investor in Medford and runs the real estate meet up group.