House hacking my way into real estate investment

[Jimmy Suszynski]

Investment Info:

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

Purchase price: $157,000
Cash invested: $4,500

Duplex with two 2 bedroom, 1 bath apartments. Nice neighborhood with great access to 2 interstates and bus-way to get downtown in minutes.

First floor has long-term tenant (>10 years) paying below market. I rose the rent when I took ownership, made some repairs and plan to raise another 5% next year.

Mortgage/taxes/insurance are around $1,100 per month, rents will be at $1,800 per month after I move out.

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

I pay the same per month now as I did renting a small 11' X 11' room in a house with 4 other people. The FHA kept my out of pocket costs up front to under $5k which left more money for improvements and down payment for my next deal.

How did you finance this deal?

FHA Loan

How did you add value to the deal?

negotiating money from seller to cover repairs. We both got quotes from contractors and I have over 5 years of experience in residential construction. I can complete the repairs for less than half of what I got from the seller.

What was the outcome?

So far, I pay about $500/month total (what's left of mortgage/taxes/insurance, savings account for the house and then my utilities) which is exactly what I paid to rent a tiny room in a house with 4 people.

Based on similar apartments very close by, the unit I'm in should bring in $1,000 per month and the downstairs will do about $800 after my next increase.

Lessons learned? Challenges?

Buying a house the week before Christmas and have a laundry list of improvements/repairs to make in the middle of Pittsburgh's winter kind of sucks. There is so much I want to do but working outside at my day job makes it difficult to find time to fix things at the house while the weather is so bad.

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

Beth Nichols for REMax 360 was such a big help. She put me in contact with great contractors and dug deep to find the listing for this place.