Finally Finished Auxiliary Unit

[Taylor Dunphy]

Investment Info:

Small multi-family (2-4 units) commercial investment investment.

Purchase price: $395,000
Cash invested: $5,000

Owner occupied multi family

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

The monthly mortgages are not linear when it comes to housing or space in Chicago. When it came down to what my budget was for my first property, I could either afford a nice condo with expensive HOA fees, or invest in a small resident unit building. I chose the latter and with my added auxiliary unit, which only took about 5k to finish since it was a finished rec room when I bough the property, I am CF positive! I can afford to put my "rent" to work towards the next investment!

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

I partnered with a local real estate investor as my realtor who owns and operates his business in the same area as mine. Their knowledge of the area as well as their ideas for improvement and what to stay away from were a huge part of my success as a first time home buyer.

How did you finance this deal?

I opted for personal financing and selected a conventional loan product for the lower and moderate income census tract. This allowed me to put only 5% down on the property and have the PMI built into my rate. However, I ended up saving money over the current FHA rate at the time when it came down to it and I had more favorable financing terms for the seller.

How did you add value to the deal?

I negotiated with the seller through my relator. We won in a multi-bid transaction where we leveraged those financing terms and had a strong relationship with the seller from the moment we toured the property.

What was the outcome?

An amazing home that I love and an investment. The first real step into the real estate investing world!

Lessons learned? Challenges?

Complete one project at time and always budget more than you think. Do not use all liquidity in a deal since you likely need some cash right away for a few things.

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

Yes, send me a message and I would be happy to connect you! Highly recommend!