How I turned $16k into 3 investment properties in under 2 years

I purchased my first property in January 2019 after spending nearly a year monitoring the Denver real estate market. I would spend my days scouring Zillow and setting up alerts, and my weekends at scheduled showings or open houses. I placed many offers and deals fell through on several properties before closing on my first purchase. 

I was looking for a property that met several criteria, including: 

• 1. Multifamily or single family with a flex space
  
• 2. At least 10% cash on cash return 
• 3. In a highly walkable location near food, parks, etc. 

I ended up locating a duplex (1 bed/1 bath on each side) in a very desirable location in the Lower Highlands (LoHi). I put an offer directly in with the sellers agent, and was under contract in 24 hours. We started the loan as a conventional loan, but ended up converting to FHA (huge kudos to my lender for pulling this off). 

Stats on the deal: 

• Purchase Price: $480k
• Down Payment: 3.5% 
• Interest Rate: 4.5%
• Closing Costs: $16k 
• Monthly Mortgage: $3,100

I knew going FHA would increase my PMI and other fees, but overall felt worth it to me to increase my CoC and reduce my out of pocket expense and risk on my first purchase. 

Revenue: 

I moved into one side of the property as my primary and secured a short term rental license (in Denver, you're only legally allowed to rent your primary side short term). I started advertising my other side as monthly. On average, here's what my revenue looks like for the property, including renting my side out half the year when I'm traveling: 

• 2019: $40,800
• 2020: $48,000

I rent my units (short term & monthly) primarily on Airbnb, but have also had success on Furnished Finder. I'm also considering moving out of my primary completely, and turning them both into monthly rentals, potentially boosting annual revenue closer to $60,000. 

Refinance:

I purchased the duplex under one deed. After two years, I decided to do some legal work to split it apart into two legal properties (~$2k in attorney fees). After this work was done, I had the property re-appraised for a combined $700,000. I did not invest any money into any substantial improvements in the property. The increased value was just due to splitting the duplex apart and having higher comps for the smaller units than the combined property. 

I refinanced the property, with the following terms: 

1. Primary loan, 80% LTV, at 3.25% interest
2. Second loan (investment loan), 75% LTV, at 3.45% interest

I also decided to cash out $40k on my primary loan. My mortgage payments are slightly less than my original, but no PMI and a lower interest rate. I am using the extra cash to go under contract on a third property (will be a second home at 10% down). 

Summary

I've been able to turn an initial $16k investment into three properties, and expect a monthly net income of $4,000+ across all three properties heading into 2021.