2/1 townhome duplex. 1,100SF main levels with separate finished basements. Larger unit has an additional room and full bath in basement. Purchased as my first house hack in which I have occupied both sides while rehabbing the other to maximize rent potential.

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

I decided to a house hack would be my best way to get started in real estate, while subsidizing my housing expense. Coming from a larger luxury apartment downtown, I was picky on where I lived. Being a side by side and not having neighbors walking around above me, or having a separate basement which I don't have to cross paths with my tenant in the other unit definitely made this property very appealing.

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

Found this property on the MLS. It was in an area outside of where I was targeting. After my GF sent it to me asking I go check it out, I went to view it and put an offer in same day. It was a lot larger than in the photos and is practically like living in a single family home, with one common wall.

How did you finance this deal?

I financed this deal using a 30 year FHA loan and 3.5% down. With closing costs after credits, cash to close was a little above $10k.

How did you add value to the deal?

I added value wit a mix of DIY work and hiring a contractor on one side. New bathrooms, exterior doors and flooring in both units. Unit 1: a contractor was hired to refinish hardwood and paint whole unit, along with some misc work. Unit 2: I installed new interior doors, trim, fixtures, paint on main level and basement. I also hired a company to replace basement carpet. All rehab costs were covered with rent paid, and I have not invest anymore personal money since owning.

What was the outcome?

After rehabbing the units I was able to bring rent up from $850/unit, to $1,250 and $1,350 totaling $2,600 in income. I still occupy larger unit and pay myself $1,100 to my business, but will rent for the $1,350 once I leave. I also use RUBS to split water/sewer with tenants, vs paying as previous owner had. I recently refinanced from a 5% IR to a 2.75% IR. After mortgage is paid property will bring in $1,256/mo. My pro forma after expenses and potential future PM is $430/mo (28% CoC Return).

Lessons learned? Challenges?

I have learned not to buy another property without reserves, as early on was stressful paying for rehab and initial repairs. Buying a property with inherited tenants can be a headache but there is always a solution. Lucky for me a tenant I inherited was able to find a home to buy after giving her notice to vacate, as she was having trouble finding a place to rent with 4 dogs. Having a formal application process avoided having a possible "professional" tenant move in as well.

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

I worked with Cierra Burmeister of Shorewest here in Milwaukee, who was a wealth of knowledge for my first purchase. She coached me through the process from start to finish and I owe a lot to her. Jamison Kaul with Fairway Mortgage also helped secure the deal and walked me through many different finance scenarios to get me the best options. Consistent follow ups and direction made my first purchase seem like it was on autopilot. Couldn't thank them enough.