3 unit building. Bought with 100% occupancy with 2/3 reliable tenants and the other one's lease ending soon after purchasing property. I plan to move into the property soon and live for almost free in Chicago.

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

Doing a house hack allowed me to enter the real estate investment world with little cash. I only had to come up with $11,538 for closing on the property.

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

I found this deal on the MLS. I had my agent presenting offers to the listing agent. The property was listed for $259k. My first submitted offer was $216k with a 3% sellers credit (net $209,520). They countered with $234k (with $5k sellers credit included). My 2nd offer was $221k (with 3% seller's credit included). We arrived at an accepted offer of $230k plus $6,840 sellers credit (net $223,160).

How did you finance this deal?

Utilized a conventional HomePossible loan with a 5% DP and low interest rate of 2.5%. Also had $6,840 in seller's credits. DP was covered with my own savings from w-2 job. Total cost to close (all inclusive): $11,538

How did you add value to the deal?

I am adding value by purchasing the property a little under appraised value and executing about $20k in various repairs/rehab. New roof (on main house and detached garage); repairs to old water leak damage to walls and paint units; resolve pest control issues; and take care of small repairs to electrical, plumbing, etc.

What was the outcome?

I am still in the rehab phase, but overall it is going well. Currently without doing any repairs (or very minimal), I am cash flowing about $2k per year with under market rents. Once I get these repairs done, I plan to increase the rent of the current tenants and/or find new tenants. At market rate (while not living in the property), I can cash flow at around $5.5k per year with a 10% PM. While living there, my total housing expenses would be $175 per month (includes capex and vacancy).

Lessons learned? Challenges?

I've had two main challenges since purchasing this property. Number one, I inherited a difficult tenant and should have required more documentation from the seller prior to close to ensure they would be moving out at the end of their lease without issue. Number two, there were some unknown repairs that needed to be done that I was unaware of at close, increasing the overall cash needed for the deal. I originally thought I would need ~$11k for repairs but that change to ~$20k.

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

Real Estate Agent: Peter Fisk - https://www.jillsilversteingroup.com/
Lender: Zack Karp - https://zacharykarp.com/
Attorney: Kelli Fogarty - https://www.fogartyandfugate.com/