The First Deal -A Saga

[Allison Adams]

Investment Info:

Small multi-family (2-4 units) other investment in Saint Louis.

Purchase price: $173,000
Cash invested: $12,000

I bought a small multi-family home (2 units) in South St. Louis. I am living in half of it with a roommate, while renting the other half. Although this situation is causing be to barely break even, I am still living at no expense to myself. Once I move out and rent the other unit, it will be a positive cash-flowing property.

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

I've always been interested in creative finance and house hacking. I graduated college a year ago, and had $50 to my name with no debt (thank you Mom and Dad). After a year of saving 50% of my paycheck, I was enthusiastic about starting to invest and grow my money.

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

I found Dahila using Zillow. Due to my inexperience and a new location, I needed someone who knew the area. I shopped around for Agents and found one who had 10 years of local experience. He was able to point out foundation issues, old furnaces, mold and other concerns I was unaware how to identify. He was also able to refer me to a lender who specialized in FHA loans.

How did you finance this deal?

I used an FHA loan with the minimum downpayment of 3%. With closing costs, the total comes out to 12k, which leaves me 8k to update the kitchen and bathroom of the second unit before I rent it out.
Due to Covid19, the FHA 203k loans were put on suspension. That loan was my first choice, and because it wasn't available to me I wasn't able to do as much rehab as I would have liked.

How did you add value to the deal?

There wasn't much value I could add in this particular deal. This was a huge learning curve for me. However, I am building relationships with my agent and lender. I told them both I plan on buying more in the future and plan on working with them again (they were amazing). In order to cultivate our relationship, I'm considering taking them up flying (I am a pilot) to look at some of their real estate from above.

Lessons learned? Challenges?

Don't move in with your boyfriend in a city you're unfamiliar with. I feel like this is a given, but at the time I thought it was the right decision. That being said, I may have rushed through the process a little because I need a place to live. And although the numbers do work out for this property, I feel as though I could have done better. Next time, I plan on giving myself more time on a deal.

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

Chris Rosenhaler is an amazing agent who is very knowledgeable about the area he works in. He is an excel wizard and has a spreadsheet to keep track of all his deals. He's very organized and will let you know what he needs from you. Chris also has a tremendous amount of patience when I ask him loads of questions. I would without a doubt recommend working with Chris.