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 I closed on on July 19, 2021. (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.Conservatively we believe we can get $850 for the unit we are staying in.

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

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.

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

We found this deal on the MLS using an Agent. We asked the seller to make repairs we did not want to make ourselves, as well as asked for a few thousand to repair the roof, get electrical work done, and replace some appliances. We also got the vacant lot next to the property which has potential for development.

How did you finance this deal?

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.

How did you add value to the deal?

Repaired Drywall and painted. Also cleaned up over grown yard and trees and put in a lawn. Replaced broken appliances.

What was the outcome?

To be determined..

Lessons learned? Challenges?

After being in a place for a week or so, we started to notice small things we wish we had before or during the inspection. We would have asked for more to be done, or more money in credits. These include things like paint, or repairing drywall, or replacing light bulbs and making sure all the fixtures work. making sure personal property was removed avoiding having to pay to get rid of them. To mow over grown weeds.

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

We worked with Guild Mortgages which was absolutely phenomenal.