Closed on my first property last week!

[Justin Wotring]

Investment Info:

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

Purchase price: $64,500
Cash invested: $19,445

First investment property and it's a duplex! Purchased sight unseen!

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

Stable cash-flowing duplex located within a half mile of a university and near where I grew up.

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

My realtor/property manager passed it along to me after one of his other investor clients stopped communicating with him. I quickly ran the numbers and after some back-and-forth with the seller was able to negotiate the price to $10,400 below asking, plus some seller credits at closing.

How did you finance this deal?

I used the HELOC on my primary residence to fund the down payment and initial repairs.

How did you add value to the deal?

We put together a repair/maintenance list based off of the initial property inspection and tenant requests and prioritized what needed immediate attention. My realtor/property manager already had a team in place to knock out most of the list within the first week!

What was the outcome?

Addressing the immediate repair issues helped set the tone for the type of landlord that I want to be and should build trust and loyalty with the inherited tenants.

Lessons learned? Challenges?

Since I live in California and this property's in Ohio, I am very fortunate to have found an exceptional realtor/property manager who can get things done. Buying a property sight unseen, I feel it's imperative to find someone you can trust, build a relationship, and follow their guidance. The main challenge I encountered was getting over my fear of taking the first steps. In the end, I can't believe how easy everything fell into place.

[Steve K.]

Did you have a foundation specialist in to check that foundation? Looks like possible step cracks? Unfortunately I don’t think this much water inside the basement would be caused by shrubs, it’s more likely you have a bigger issue. If those are indeed step cracks, and the water is entering through the mortar lines, that would explain the large amount of water and would be an indication of the beginnings of foundation failure unfortunately. This wouldn’t be caused by a few plants growing on the outside, but rather by a large amount of pressure being exerted on the foundation walls over time, causing them to crack along the points where the blocks are bonded (mortar lines) which are the weakest point and therefore the first points along which the foundation will show signs of failure. Putting drylok on the inside may reduce the amount of water entering in the short term but failing to address the pressure issue on the outside will just make the problem worse over time as the water isn’t prevented from coming into the wall itself as only the inside is sealed, so it just gets trapped in the wall, further degrading the structural integrity of the wall. I would get a foundation specialist out to assess the issue if you haven’t. Ideally you would have taken this step during the inspection contingency period but I’m assuming it’s too late for that now, so keep that in mind for next one I guess. Part of the reason I'd never buy a place sight-unseen but to each his own. Slapping some drylok on the inside, removing some plants and throwing some dirt on the outside may not be an adequate solution, in fact I'd be surprised if it works... possible legit solutions will be to dig up the yard to assess the outside of the foundation wall, and address the pressure issue by back filling around the wall properly, sealing the outside of the foundation wall (not the inside), improving the negative grading issue with more than just adding some loose dirt on top, and adding French drains. Depending on how long that much water has been entering the basement, you’ll want to look at the floor joists and check for mold/rot. If you’re planning to keep this property as a buy and hold I would address the foundation issue properly before it gets worse and leads to a more expensive repair down the road. Whoever did the walk through/inspection should have informed you of the possibility of foundation issues here and recommended having an expert take a look.