Falmouth, ME Buy and Hold

[Brian McDonough]

Investment Info:

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

Purchase price: $307,000
Cash invested: $15,000

This investment was a house hack. My wife and I bought it, lived in it, and fixed it up. It is a 1950's cape with a detached accessory dwelling beside it. The accessory used to be an old barn which someone in the 80's converted to a living space. It has been the perfect investment for us. We put in a lot of sweat equity and about $30,000 all together in upgrades since we bought it. But it just recently appraised in the mid $400,000 and continues to cash flow. We moved out a couple years ago, and all together have not missed a single month of rent since buying the place. We are still pretty hands on in the management of the property which sometimes feels like the wrong move, but given our skill sets (me-contractor + wife-real estate broker), and the small size of our portfolio so far, it seems to make sense for now.

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

House hacking made perfect sense and really seems like the best possible way to get started in all of this. It gives you a little taste of all the different aspects of being a landlord and managing a property while usually not being unmanageable. That being said, there's still so much to learn and I'm stying hungry!

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

MLS. Paid asking price, but negotiated about $30,000 worth of upgrades into the deal. New septic, new roof on both buildings, etc. If I were to buy this again today, in this market, not only would the asking price much higher, but I don't think I would have a chance to negotiate all those repairs. Very happy I bought when I did!

How did you finance this deal?

FHA. 5% down. Refied a couple years later to conventional, got rid of PMI.

How did you add value to the deal?

Negotiating repairs and being willing to take on a fixer upper which would have scared many people off at first sight.

What was the outcome?

Still own it, plan to hold for a long time. Cash flows nicely, and if it continues to appreciate as it has, who knows where it'll be in another 10-20 years. Hoping to aggressively pay it off, and access home equity to buy more units.

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

Niles Shedlarski & co. best real estate brokers around. Hang their license at Better Homes and Gardens in Windham Maine.