First Rental Property - Duplex in Stockton, CA

[Anthony Chao]

Investment Info:

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

Purchase price: $265,000
Cash invested: $40,000

Duplex in Stockton acquired at $265,000. Monthly rents are $2,300. Cash on Cash Return: 10%. Cap Rate: 7%, ~$300/unit/month. 30% down, 4.25% 30Y conventional. Bought with 50/50 partner who was also an agent. With seller credit and agent credit, got to 0 closing costs. My cash out of pocket was ~$40,000.

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

Acquiring my first rental property. Buying somewhere nearby that I could drive to (1-1.5 hours away).

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

Found on Redfin. Listing had been on Redfin for a few months, no offers. Then sellers decided to raise rents to market rates. My partner and I were watching the Stockton market closely and we caught this change and quickly put in an offer close to list. Later ended up negotiating it further down by asking for seller credit for repairs at closing.

How did you finance this deal?

Conventional 30Y at 4.25%.

How did you add value to the deal?

Bought off Redfin, no immediate value add.

Lessons learned? Challenges?

Keep an eye on your market! Listings change, if you catch that change before everyone else, you can find yourself a great deal.