First Duplex Investment Property

[Payton Pearson]

Investment Info:

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

Purchase price: $180,000
Cash invested: $1,000

Nice duplex in a middle-class, good neighborhood. 1972-built, very well-maintained.

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

I saw it on realtor.com, beautiful home, well-priced, and I was looking to move from my current residence to take advantage of VA loan benefits. I also wanted a slightly better neighborhood than where I was living at the time.

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

It was on realtor.com, and I had my real estate agent take a look at it. Negotiating was fairly straightforward. We offered 176.5, they countered with 180, and that was where we settled. It was originally selling for 185.

How did you finance this deal?

I did a VA loan with 0 money down, at a 3.625% interest rate. The VA loan required about $3000 for origination, but other than that, it was a very nice loan.

How did you add value to the deal?

Property will eventually have a fence added around the backyard. I will also be doing various improvements around the property as time goes on.

What was the outcome?

Smooth sailing. The other unit is already occupied by another tenant, paying slightly under market rates, but she is very clean (elderly lady). I will likely increase her rent once her 2-year lease is up, if she decides to stay. Only up to market rates of course.

Lessons learned? Challenges?

Unfortunately the property did not appraise as high as I was expecting, but the lesson here is not to expect a high appraisal. Though appraisers are quite professional, they still have variance in their judgments, even when informed by similar property values nearby. Two duplexes directly adjacent to this one were both selling for 194.5, and in the same condition.

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

Loan Officer: Phil Forbes
Real Estate Agent: Colleen Carr

I use these two individuals regularly. They have never guided me astray, and are very, very good at what they do.