All Forum Posts by: Clark Kirkpatrick

Investment Info:

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

Purchase price: $76,500
Cash invested: $23,000

I got a good deal on a duplex with value-add potential. It's fully rented out on day 1, and I plan to make improvements as time goes on.

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

FSBO - walking around town, I saw a for sale sign and called the number.

How did you finance this deal?

Conventional financing

@Vanessa Carvajal You'll always get less rent per month if you're living in one of the units. What you're saying is basically correct - while you're living there, it might not cashflow but your living expenses will be much cheaper. Once you move out, it will cashflow. 

So it's good in both cases - reducing your expenses in the short term and giving you cashflow in the long term!

Thanks for your responses!! 

I hadn't thought about any of these things - just finished Matt Faircloth's book Raising Private Capital and I'm trying to create a system to start doing that properly, and this is really helpful for me!

@Alessandro A. I'm working on my first full BRRRR now, got a short sale under contract but still have a lot to do!

I know what a preferred return is, and I've heard people say that there are deals when it makes sense, and deals when it doesn't. Obviously I'm only looking at equity deals here.

Thanks!!

Hi Delmas!

It depends on your lender. If you call around, you might be able to find one who will factor that into your DTI - it all hinges on finding a lender who's investor friendly.

I found one at a small local bank, and I was referred to him by a real estate agent. My lender is a RE investor himself, so he knows what I'm doing and is comfortable lending under those circumstances.

Cheers!

Run the numbers both ways! Then you'll know the numbers for when you're living there, and you'll know the numbers for after you move out.

Both will be relevant, and you'll want to know how it'll look when you're there, and you'll also want know how it'll look once you've moved out!

Hi Eric!

I know that it's possible to do this. 

For me, my house hack was my first deal and I wanted to manage it myself, which I'm doing now.

It has its annoyances, but I think it's really important to understand property management so that you can know what's going on when you hire professional management in the future.

That said, if you're particularly ill-suited to self-management for one reason or another, I know that companies will do it! And you'd have the added benefit of the tenant not knowing that you own it (if that's important to you). If they found out that you do own it, they'd probably just come to you for their complaints, and that would defeat a lot of the purpose of the management company.

This looks good! Is this based on both units rented or just 1 unit rented?

You might consider putting less money down and keeping it as cash reserves instead. I put 20% down, and now I wish I'd kept it as reserves instead, because once you get a tenant in the other unit, your cash reserves are stabilized and you can build that into a down payment for a next property!

Hi Vanessa!

I'm house hacking a duplex now. Here's what I would do.

1. Analyze it as if both units were rented. This is the long-term analysis, and it's really important that you know this will work ahead of time. If it won't work after you move out, then you don't want it.

2. Analyze it as if one unit is rented, and the other is not. This gets a bit messy because a lot of expenses are shared between the 2 units (cutting the grass, replacing the roof) but you can get a good idea of whether your tenants will be paying for your mortgage or not. And that's really good to know.

Good luck!