My First Duplex/Multifamily

[Dan Maegli]

Investment Info:

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

Purchase price: $101,000
Cash invested: $3,500

My first property which I lived in for 5 years as I refinished the attic and improved both units.

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

Have always wanted to invest in multi-family real estate since I was 10 years old.

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

I had honestly been looking at properties for two years prior. I'd probably looked at 40-50 properties in person before landing on this one.

Didn't really know what I was doing but knew I liked big spaces, dry basements, and unutilized attic space.

How did you finance this deal?

I just offered asking as the price seemed right.

I actually offered $2000 additional if the seller would then apply that $2000 to my closing costs letting me wrap those into the FHA loan which I only had to pay 3.5% down.

How did you add value to the deal?

I finished the attic space adding an additional 700sqft of living space. Removed all of the carpet from the rest of the home, added some small conveniences here and there and eventually removed all of the wallpaper and repainted.

What was the outcome?

It is an amazing cash flowing property producing a solid $800 a month with more to be made as rents go up each time I get new tenants.

Lessons learned? Challenges?

I discovered problems with the property and location after the fact which at first I thought to be awful but later found they were actually fairly minor in retrospect.

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

Not so much on this deal. Although at the time my income only showed at $17,000 a year and most lenders turned me away.

I was determined though and I just kept telling them I'm buying it and I don't care what it takes so if you won't give me the loan point me in the direction of someone who will.

Eventually Shorewest's in-house mortgage broker Wisconsin Mortgage made it happen and immediately sold the loan to Chase who of course would not write it.