Analyze My First Deal & Next Step Options

[Joseph Matarazzo]

Hello everyone, please feel free to read my story and review my deal. 

I purchased my first property in Summer of 2019. A three family in Plainfield, New Jersey. Purchase price of $430,000 using FHA loan. Each unit is 3 bedrooms, 1 bathroom for a total of 9 bedrooms and 3 bathrooms. It is 3300 SF and has a three car detached garage. I inherited tenants, and chose the worst of the three units to live in and flip while I live there.

Income: Unit 1: $1350/mo (drastically underpriced but a great long term tenant). Unit 2: I live in, and get $500 from a roommate. Unit 3: $1500/mo. I also rent the three car garage for $400/mo.  Total is $3750 plus I live in one unit. 

Expenses: Mortgage, interest, and insurance: $3500. Repairs: $200. Vacancy: $200. Management: $0 (I live there so I manage it, but I could be paying myself?). Utilities/Trash/Sewage: $350. Total: $4250/mo

$4500-$4500= 0 cash flow, but I do live in one of the units. So I essentially live for free while also building equity. 

Fast forward to today, the unit 3 tenants have moved out and I flipped the unit and I am now getting $1900 for the unit. The unit 1 could rent for 2000 but the tenant is so good and with covid happening i havent raised the rent yet. So my cash flow is now +400 with room to improve. Also, the value of the property is now $480,000+ and I have about 18% into it. 

Question for bigger pockets: What does everyone think of this deal for a first time investor/home buyer?

Moving forward:

Option 1: I have the option to refinance and drop my monthly costs by $500, but the catch is that I will be locked into living there for 1 year due to mortgage terms. I currently have around 60k saved up for another property purchase but would have to wait and keep saving (hoping rates dont jump too high and also that property prices drop by next year). 

Option 2: I dont refinance, and sometime this year buy another 3-4 unit multifamily and move into that one. I would rent my current unit out for another $1400/mo (1900-500) cash flow plus whatever I made from the new property. 

Thoughts, critiques, concerts, feedback?