New Investor-first property

[Trudy Tucker]

Investment Info:

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

Purchase price: $254,456

Two houses on .26 acre lot in a popular area of St. Petersburg. A 1934 Craftsman cottage(2/1 with a den) and a smaller 550 sq ft house(1/1 with bonus room) . Currently renovating and bringing up to code. Will be renting in the next couple of months. This is my first investment purchase. Cash flow expected to be about $800/month. Will be managing ourselves to start. Property zoned <10 units. Bigger plan to build-thinking 2 cottage duplexes. Later possibly a garage behind the larger house with a apartment above to possible make an airbnb.

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

Houses less than 1000 sq ft are selling for $200,000+. I could see that this property had a lot of potential since it was zoned for up to 10 units already. These craftsman houses are hard to come by and I could see the value in that as a rental with the potential to expand the property value by added more units.

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

It was an interesting situation. I originally found it on mls listing, but the owner then said it was going to auction on xome.com, I put in 3 offers of which he declined. Two of the offers had to go through the auction site but were still before the auction. Since they were declined the site gave me the ability to offer those same bids on the day of the auction. I actually thought I was done but I won the auction at my last offer. I then negotiated a credit of $10,000 at closing.

How did you finance this deal?

Conventional loan

How did you add value to the deal?

Currently bringing it up to code. Failed 4 point inspection on everything. I replaced the back half of the roof, added 3 closets(one is for the washer and dryer), matched the fixtures, repainted the house and currently rewiring the house. It is 85 years old and the wiring and electric service is not enough for the house. Smaller house has not been started yet.

What was the outcome?

House will rent for $1600/month. Mortgage is $1527. Smaller house will rent for $800-900/month.

Lessons learned? Challenges?

Things take so much longer than you expect.

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

Agent Stacy Bennett. Looking for a lender with less fees.