First Purchase - Turn Key Duplex

[Daniel Kidd]

Investment Info:

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

Purchase price: $105,000
Cash invested: $27,500
Sale price: $110,000

This was the start for me. I had two more properties to close on later this day but this was the first one for me. It was just a simple turn key duplex that I found on the MLS with the help of my awesome agent. There wasn't anything special about it at the time, but it is now one of my higher producing assets as far as CoC ROI. When I originally purchased this with my brother it was functioning just around the 1% rule, but it has quickly gone up to about a 1.4 in the six months after purchasing it.

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

I was actually looking at a bit of everything at the time and was actually under contract for a SFH as well as this one when the offer was accepted. I didn't like the SFH home itself or the neighborhood much and let that one go and focused on this one. The good thing about this deal was that the seller was ready to let it go and agreed to all of the requests to fix all of the little things on the inspection prior to closing. Everything just came together nicely

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

This was a deal that came up on the MLS and I jumped right on it. The negotiating part wasn't really all that hard. Like I said before, he was pretty motivated and I only asked for things that came up in the inspection. He even gave me half of the cost of the roof since it was 15 years old. I used this money to put gutters on. Apparently no one in NC uses gutters..

How did you finance this deal?

This deal was also part of the Roth IRA money that I pulled out. I also partnered with my brother in order to have enough to close one some other properties later in the day. This was a conventional finance with 25% down at about a 5.7% rate on 30 years.

How did you add value to the deal?

There really wasn't all that much to do even if I had wanted to do something, but I added gutters and fixed some of the landscaping issues that were going on with the place. A few things have broken here and there, but for the most part this has been a headache free investment. I have also been able to up the rents by about $200/door over the last 6 months. Fayetteville area rents have taken off in a good way. I wish I had bought every duplex last summer.

What was the outcome?

The outcome so far has been great. No huge appliances breaking or anything like that. One tenant did leave after the rent went up but we had no issues getting a new one in there ASAP. The property was a bit disappointing at first with only about $100 in cash flow a month but after the rent bumps it is closer to $500 now.

Lessons learned? Challenges?

I am just glad that I took the steps to get started. This deal did not look like a home run at all as I was going into it, but I knew I needed to get started and that I could make it work. I wish that I could have predicted how high the rents would go because I would have begged for money eight months ago to buy every 100K duplex on the market. You cant get one now for less than $150K since rents went up to about $750/door for a 2bed 2bath.

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

Shelby Osborne - Agent - Team Lead for Five Pillars Realty
Patrick Stoy - MC Mortgage
Stephanie Foley - Insurance
Jennifer Kirby Fincher - Closing attorney
Gil Jacobs - Property Manager - Alotta Properties