My First Investment Property

[Marshall Henry]

Investment Info:

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

Purchase price: $316,500
Cash invested: $18,500

This is a triplex my partner and I closed on on July 19, 2021(FHA). (2) 2bed 1bath and (1) 1Bed 1bath. It is a owner occupied. We live in the 1bed 1bath unit and rent out the other two. mortgage payment (principal + interest + taxes + insurance) is $1,805.33. We are responsible for water/trash/sewer which is on average $250-$300/month conservatively. total expense = $2,105.33
The rent from the two units are $900 and $875. We will be raising rents on both units to $1000 for 12+ month- only an offer we will make to the current tenants if the choose to renew their lease. Anything/Anyone else will be $1050 after the lease expires in the next couple months. We think this makes sense because of the strong demand in the market currently and very few to no inventory available. We allow pets which is also extremely desirable in this area as well as tons of yard space on the 0.42 acre lot and 1 block over from an elementary and middle school. Conservatively we believe we can get $850 for the unit we are staying in. We plan to buy another property next year and rent out the unit that we are in.

After our lease ended, we moved from Steamboat Springs, Colorado which is about 45min away. We were paying $1,250 for a 1bed 1bath condo which was a steal. Currently, average prices for 1bed 1bath in steamboat is $1,800/month (utilities not included) or $325,000 + HOA to buy outright. We figured this was a way to subsidize our living expenses. A cash-flow of anything less than a negative $1,500 was a win in our books. We went with the minimum FHA down payment of 3.5% and locked in a 2.5% APR. Due to this we were able to retain the majority of our down payment budget. Because of this, we have well in excess of our 1 year reserves for this property.

Our belief is that this is a growing area. Though the numbers on this property are not the best, we believe we are in a better situation than we were before. We don't plan on selling this property anytime soon, if ever. We believe we will be able to increase our rent over time as it is a growing area. Prices in this area has been on the up tick for the first time in a long time. Talking with agents we noticed a trend of people escaping the cities and even California. It is also a great option for people who want to live/work closer to Steamboat Springs but are not able to afford the multimillion dollar homes there, or even the $2,000/month 1bedroom condos. There is also a trend of businesses moving in. The city as announced plans to use favorable tax benefits to support major developments that would attract visitors.

Though I wished we had got in at a lower price, I am also excited to embark on this journey with my partner. The saying is there is no mistakes, just learning experience. And I certainly believe we will be learning a lot!!!!