First Home Purchase - Duplex

[Tom Mickley]

Investment Info:

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

Purchase price: $143,000
Cash invested: $8,000

Side by side duplex with 2 car attached garage per unit. One unit fully renovated and rented out for the last 5 years (same tenant). Other unit needs updated but the current tenant has been there for 8 years.

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

I have family members that have several 2-4 unit properties. Watching them live for free (tenants paying their bills) made me want to get into residential multifamily units.

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

My Uncle is a realtor. He did the majority of the negotiations. I was young with dumb at the time.

How did you finance this deal?

FHA loan with 2% down. The seller paid half of my down payment.

How did you add value to the deal?

New roof (insurance claim), new carpet in one unit, and few here and there upgrades along with new long term tenants since the property was vacant during purchase.

What was the outcome?

I lived in one side and rented out the other side starting the day after the note was transferred. I lived there for two years until one of my real estate agents found a foreclosed single family home to house flip. Living for free at this duplex gave me the cash for the down payment on the new flip without needing to extract cash from this investment. I still own this duplex as it does produce positive cash flow.

Lessons learned? Challenges?

Learn everything you possibly can before taking the leap into real estate investing and rental properties. I was 23 at the time and didn't do enough DD before I made the biggest investment of my life at the time. Don't just learn the basics. Learn every aspect of real estate - it will benefit you with many, many dividends in the future.

Also... Don't give up during the difficult times.