Triplex, first deal that was not intended to be a deal

[Reggie Withers]

Investment Info:

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

Purchase price: $460,000
Cash invested: $70,000

The first deal that I did not intend to be a deal. A story I am sure is familiar with a lot of people. I grew up poor, Section 8 housing, wanted to break the circle of poverty. Went to school to become a nurse, received my MSN degree. I became an ER nurse, worked 2 jobs, saved more than half my salary the first year. Needed a place that would allow me to have my mother live in a unit due to the high rental cost in LA.

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

Never intended to actually invest. My goal was a duplex that would allow me to live in one unit and my mom in the other so we could move out of Section 8 housing. Figured if I found a place it would be cheaper than renting. I found a triplex in my search. Figured if I rented the third unit to my aunt I would not have to cover the mortgage myself.

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

I was working with a family friend who was a realtor but I found the deal myself on Zillow or Redfin.

How did you finance this deal?

Again not knowing any better did not really shop around which made the deal take forever as I went with Wells Fargo at first. But after much heartache I ended with a local lender, 30 year fixed FHA loan with 5% down.

How did you add value to the deal?

There was not that much competition for the deal as every unit was a total gut. The first unit I hired contractors. And after I saw how difficult it was to work with them and the amount they charged me I learned how to do a great deal of the work myself from YouTube. It took months but added a lot of value through rehab.

What was the outcome?

Currently, I still owner occupy, renting out the other two units to my aunt and my mother. Not obtaining market rents but teaching me how real estate can help in my goal of financial independence and most importantly aiding my family. I have gained a lot of equity in the home do to my updates and vicinity to the new Rams stadium.

Lessons learned? Challenges?

The biggest challenge was not knowing what I was doing and trusting the "experience" of others even when I did not agree with them. Yes, you should listen to experts but that's not what I had surrounded myself with. Educate yourself before you walk into any circumstance. People will take advantage of your lack of preparedness. The challenges, however, prepped me to weather future encounters as I am able to ask knowledge-based questions for all my future real estate endeavors.