Bought a Oakland 4-plex to house hack and hold

[David Lao]

Investment Info:

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

Buy & hold 4-plex with deferred maintenance. Below market rents, FPE panels, fuse subpanels, mold, leaky roof, non-compliant sewage lateral, and dated units.

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

30-yr fixed-rate FHA loan interest at 2.25%/yr; a block away from two major roads with commercial properties; the good side of MacArthur Blvd; good foundation

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

Off-market deal through family contact. Negotiated cost of sewage lateral repair.

How did you finance this deal?

FHA loan

How did you add value to the deal?

Sweat equity by addressed deferred maintenance and modernizing a dated unit

What was the outcome?

Closed the sale in Feb 2021

Lessons learned? Challenges?

FHA self-sufficiency test is a real thing and can affect your down payment. Don't trust your loan officer who isn't worried about it unless he convinces you with his or his calculations.