Just closed my first deal. Thoughts ?

Question

Side by Side Duplex Purchase Price $365K

B+ area

Negotiated roof to be replaced and property needs about $10k in cosmetic work.

Income potential $3.7k

PITI - $2.6K

Rent Vacancies - $185 (5%)

Repair & Capex -  $460 (12.5%)

Trash, Sewer, Cold water -$100

NOI - $335 monthly or $4k annually for CoC of 6.7%  if both sides rented.

I plan to live on one side, eliminate the rent I was paying of $1,600 and rent the other unit for $1800-1900

The deal does not look bad, but I’m just beating myself a bit as this was an off market deal through cold calling a motivated seller and I could have potentially lowered the price to $350k with some better negotiation. Just got too excited and agreed on $365k. Was too tires of renting and having all my offers beaten by all cash investors

Jacob Hornberger · Answer

I don’t think it’s a bad deal. Not all of them are going to be complete home runs.

This will be a great experience to learn from, and you’ll be saving on your expenses/ building equity as you do it!

Josh Young · Answer

@Elton John that does look like a good first deal. Don't beat yourself up over the $15k that you think you could have negotiated down, you will look back in 5 years and that $15k will be insignificant. Over time rents will increase and you will be able to refinance also. When looking at a deal there will always be something you wish was better and there will always be a reason not to do the deal, but if you do your due diligence and the numbers make sense, pull the trigger.

Alecia Loveless · Answer

@Elton John I think this looks like a solid first deal. You will get a little help on your expenses from the rent from the other side while you start building up your equity.

Then down the road if you want to you can start looking for another property and rinse and repeat and use what you’ve learned to get a better deal the next time around.

While you’re living in your side of the duplex if the area warrants it perhaps you can make some upgrades to your side little by little so that your side will be able to get a higher rent when you move out.

Or if you just like living there you can do what I’m doing which is stay in a fairly affordable unit and continue to buy other properties. I house hack a duplex and have bought 6 other properties while living there. The rent from the other side covers most of the bills and my spouse and I pay about $500/month to live there.

Christian Ehlers · Answer

This is a solid first deal. Don't worry about the $15K on the purchase price, you and your tenant are paying that $15K off over the course of 30 years. You got a brand new roof (usually a large CapEx item you would have to pay for) a duplex that will Cashflow once you move out, and a ton of experience that you have and will continue to gain along the way. Seems like a good one to keep moving forward on, gain experience and continue learning so you are ready for your next deal down the road

Andrew Postell · Answer

@Elton John did you purchase this property with a loan?  If so, what did the property appraise at?

Just closed my first deal. Thoughts ?

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