First Investment Deal

[Max T.]

Investment Info:

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

Purchase price: $200,000

1st purchase. Duplex. Owner occupied and improved for the first 4 years. Put down 10% at the time and got the 8k closing costs Obama credit. Renting both units since moving out. Cash out refi'd about 70k with an appraised value of 350k last year. Used half of that cash to rebuild the front facade and the other half for a new investment.

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

Wanted to get started and understood the basics of house hacking a multi unit.

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

MLS. 1st appraised value was less than contract price, so we were able to renegotiate the price. Also used the inspection results before that to get it a bit lower.

How did you finance this deal?

Conventional 10% down, Obama 8k closing cost credit.

How did you add value to the deal?

Lots of renovations over the years bit by bit:
-replacing plaster with sheetrock in unit 2
-new bathroom in unit 1
-new windows unit 1
-granite counter and tile backsplash unit 1
-new front facade recently
-new water heaters
-new furnaces

What was the outcome?

At first I was living there and my tenant was covering about 85% of the monthly costs.
Now both units rent for a combined 2310. My new mortgage is about 1500 and (I hope) all of the major capex has been addressed at this point.
This area has appreciated significantly since this purchase. I plan to keep this property forever.

Lessons learned? Challenges?

Capex ain't no joke.

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

Everyone did a good job - agent, lender, inspector, etc.