First buy and hold rental property - duplex - house hack

[Jordan Archer]

Investment Info:

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

Purchase price: $155,000
Cash invested: $6,000

Better late than never with this post!

This is my first income property that I've been house hacking with. I bought it at a great time in 2014 for $155,000, and after owning it for 5 years the value has increased to over 260,000 (based on my last bank appraisal this year).

Purchasing this property has easily been one of the best decisions of my life. I really got lucky with the appreciation on this, and won't expect this level of gain from any future project.

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

I was very interested in buy/hold, and at the time I had a job which made financing very easily. I wanted to house hack very badly, and this made perfect sense.

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

This deal was found through a real estate agent, and it was purchased at list price. Actually I got lucky, because list price was 175k, but the appraisal came back at 155k, so I got a better deal than expected.

How did you finance this deal?

FHA 3% down

How did you add value to the deal?

It just needed a good paint job, cleaning, and a good tenant. Over the past 5 years of owning it, I've remodeled both bathrooms on the side I live in, and partially updated both bathrooms on the tenant side. There are other small improvements made, but nothing too major.

What was the outcome?

I've had a solid tenant for over 5 years, and It has appreciated in value significantly.

I will be taking out a HELOC against the property this year in order to invest in a 10 unit multifamily apartment complex. However, I am going to wait until prices come back down, because I'm hoping to time the market right again.

Lessons learned? Challenges?

I would have set a minimum yearly rental increase in the lease. Also, I wouldn't have told the tenant that I am the property owner. It is hard to separate business from personal when your neighbor is your tenant. Finally, I would have kept things more rigid with inspections and lease renewals with the tenant.

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

I'd recommend Jordan Archer as your real estate agent ; )