My First REI - A Duplex Hack - 5BR 2BA

[Timothy Gagnon]

Investment Info:

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

Purchase price: $160,000
Cash invested: $20,000

Family purchase from Grandma. She's downstairs in the 3BR until she can't be anymore and I'm upstairs in the newly renovated 2BR for the forseeable future. Will be a full rental eventually.

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

I was already looking when I learned my grandmother was in dire financial straights, negative cash flow and in a reverse mortgage, someone needed to step in, cash her out of her equity while allowing her to continue to live there.

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

The family heard I was looking and told me about the situation.

How did you finance this deal?

Traditional 15+1 ARM @ 3.865%. Will refi into a 15yr fixed within the first 36 months.

How did you add value to the deal?

I completely renovated the 2nd floor apartment and dressed up the yard, fenced it off and made the basement hospitable.

What was the outcome?

Still living there but eventually this will be a free and clear rental property within 10 years or so. I may HELOC it to get a DP for future endeavors or not, we'll see.

Lessons learned? Challenges?

Yes, rehab can be extremely costly without knowing the trades yourself. Spent $5k on sheet rock for 300 sq. ft., also spent $3k to put in a brand new bathroom with dual sinks and new fixtures. The former was a screw job, the latter was a good deal, need to know what you're doing.

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

My local Credit Union is carrying the note, I'm not sure if they're a portfolio lender but I'll do a few more deals with them.