Our first duplex, rough but worth it

[Jared Hanson]

Investment Info:

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

Our first multi-family! A small duplex grandfathered into a single-family neighborhood in a growing part of town.

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

We had set a goal for 2019 to purchase a dulex, it was in a single-family neighborhood, and its price was low enough that it would cashflow as soon as it was rented.

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

I saw this property within minutes of it being listed for sale. It had so many offers and viewings that we couldn't even get the agent on the phone until after it was pulled from the market. It had lasted about 4 hours before the owner accepted an offer but we put in a full price backup offer and assured the seller's agent that we were comfortable with the damage we had seen and would be easy to work with. After the other buyers kept asking for too much, the owner chose to accept our offer.

How did you finance this deal?

We used a small bank lender that we met at a local REI group. I will add his name later after I make sure that is ok.

It was a conventional 20year loan. We partnered with another young investor to cover half of the expenses.

How did you add value to the deal?

We added value through upgrades of most of the issues that had been neglected by the past owners. We put in sweat equity and have since raised the rent significantly thanks to these upgrades.

What was the outcome?

While we are currently still renovating the last unit, the first is rented for more than the mortgage and we believe this will be a great cash flowing property once the second side is done.

Lessons learned? Challenges?

While we had actually bought the property partially to learn lessons and came in with open minds here are a few lessons.
1. You can use lowes long term finance options to purchase all your materials at once at a steep discount.
2. Single-piece shower/tub combos are gods gift to easy bathroom remodels... but expect to have to take at least one door down to get them into the bathroom.
3. Do a 3d tour of the property with your iphone. It'll help when your in lowes wondering what trim to buy.

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

Tiffany Hanson - Realtor
John Reding - Lendor
Luke Riley - Insurance Agent