New Construction Duplex with a Commercial Loan

[Kelly Skeval]

Investment Info:

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

Purchase price: $235,000
Cash invested: $25,000

Built to owner occupy the upstairs
duplex
3bed/1 bath up and down

Cost to build $235,000
Current Value $275,000

Each unit rents for $1800/mo

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

We needed a bigger home for our family and wanted to continue to live in a duplex where our mortgage was paid by tenants. A vacant lot came with our 2nd income property purchase.

How did you finance this deal?

This deal was financed with a commercial loan (80%)
For the down payment:
We had equity in the land (~$30,000)
We used a home equity loan from our first duplex to fund the rest of the down payment

What was the outcome?

We lived in this duplex for 3 years. Rent from the downstairs apartment paid the entire mortgage and taxes. Now it is a great cash flowing property.

[Kelly Skeval]

@Jaysen Medhurst Thank you! I haven’t penciled them out but I’m sure they would have. It definitely made it more appealing that we owned the land “free and clear.” Our mortgage was roughly $1700 and the downstairs apartment rents for $1800/mo. Since we no longer owner occupy it generates quite a bit of income. It also rents very easily because it’s newer and there’s little to no cap ex and repair costs.