First Cash Flow Investment.

[Pete Harper]

Investment Info:

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

Purchase price: $97,500
Cash invested: $10,000

2/1 Duplex near Texas A&M in Bryan.

This was my wife and my first serious Cashflow investment. This duplex was owned by former A&M grad student. It needed a new roof and full makeover inside.

Side B we put a fresh coat of paint over the ‘80s style avocado walls. Kitchen cabinets were functional but looked bad so we painted bright white for a clean look. Updated light fixtures, bathroom sink etc. With the tiny gallery kitchen with limited counter space we added over range microwave. Rents raises from $480 to $650

Side A was in rougher shape. The old pergo floors were in bad shape. We decided to update with glue down vinyl tile. We painted kitchen cabinets similar to side B. Final rent was $700/month.

My wife and I enjoy fixing places up so we did the majority of the work ourselves. We hired a roofer and flooring.

ARV $125k-$135k
Cash on cash 16%
Cap Rate 12.1%

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

We are retired, looking for long term cash flow.

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

Found on MLS, negotiated with buyers agent. We were able to get significant price reduction using inspection report.

How did you finance this deal?

Conventional loan, 30yr fixed, 25% down.

How did you add value to the deal?

New roof, rain gutters and full makeover inside.

What was the outcome?

Long term hold for positive cash flow

Lessons learned? Challenges?

My wife and I enjoy doing our own renovations. We get a nice sense of accomplishment making something better.

On renovations we learned painting tired old kitchen cabinets is a low cost way to spruce up a kitchen. We also learned the over oven microwave are a nice upgrade for these tiny galley kitchens.

We learned not to trust neighbors for renter references. We have had a bad experience with first Tennant. Police were called out the first month, habitually late on rent. Plan to evict.

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

Johnny Horton was our agent. He is the best! Plan to use him again.