Bought a 4-unit multifamily property for $350,000 with the seller agreeing to pay for $7,000 in closing costs. Each unit is 2 bedrooms and 1.5 bath, living room and separate kitchen. Each one is 1000 sq ft and two-story. While looking for a house in Houston to move into and house-hack, I increased the purchase price I was willing to pay. Given that I was not happy with any place I could find, I decided to take a look back at Lake Charles. I found this property on Zillow and asked my realtor to schedule a time for us to go see it. I ran the numbers conservatively assuming rent at $750/month. Once I saw it, I knew the potential and that it could easily rent for more. I moved into one of the units and made this my primary residence to lower the interest rate on my mortgage. I was able to get 4.125% for a 30-year term and paid $350 in points. One unit is occupied currently with a longer-term tenant paying $830, but I just rented one of the other units. With these two units rented, I already cover the P&I, taxes, and insurance. Very lucky to have found this property in Lake Charles available, but once it was out there, I did everything to secure it!

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

Always interested in multifamily to mitigate risk of vacancy and have found you can typically get lower pricing per unit. It also makes it easier to manage properties like this because they are in the same location.

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

Found it on Zillow. Went to see it and put an offer that same day. Was told there were other offers and to place my best offer. I placed the highest I could, almost matching their listing offer, but making sure at first that the numbers would work at that price point. It still did beautifully, with cash flow of $800 and ROI of over 12%.

How did you finance this deal?

I went through a mortgage broker who works closely with Fidelity Bank. I received a recommendation to use him through my realtor, who I have done business with before and who I can trust. The person knew the area well and made the closing very simple and straightforward.

How did you add value to the deal?

So far I have not added much value to the property but once moved in, I intend to start work on it to bring value of rentals up. I am also purchasing a washer/dryer for each unit to increase the rent amount that I can charge.

What was the outcome?

The outcome is that I just moved in to the property with my roommate from before. He pays me little in rent, which still adds to cover mortgage and other costs. I have recently rented one unit out, and I continue to charge for the one rented by long-term tenant. I will try to find a suitable tenant for the fourth unit and then continue to save and look for the next big deal.

Lessons learned? Challenges?

Run the numbers. If the numbers make sense, then the offer is still good. I had to go up in my offer by $25,000, but the offer was still good and it was still a good deal. Due to coronavirus, I was scared towards the end of closing because I felt like property values would go down a bit. But when thinking about this as a long term investment and knowing that property values will likely go up over the years, I was comforted by the notion that this was still a great deal.

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

Yes, my realtor name is William Kracijek. I would highly recommend him for his service and his dealing with the listing agents and knowledge of the market. The mortgage broker I used was John Hoffpauir from Nola Lending. He managed to get me a great interest rate and was very responsive whenever I had questions.