All Forum Posts by: Justin Aymer

Congrats on the duplex! I closed on my first investment property in late February. It was your same scenario. Duplex with a tenant. Older construction though. Do you plan to keep the tenant?

@Joe Santiago - it would be cool to grab some lunch. let me know when you have some time in the next week or two.

@Account Closed @Chris K. @Joel Somerset @George P. @Raymond B.

Thanks for the comments guys. Here are the details of the deal:

The Story

I found this duplex on Craigslist as a For Sale by Owner. Each unit has 2 bedrooms, kitchen, bathroom, living room, dining room and access to the basement. They were asking $50,000. It was owned by a lady who passed away about 7 months ago and the home went to her kids. The family didn't live in the area and didn't want to deal with tenants and repairs. I offered them $30,000 and they accepted. Similar properties in the area were selling around $85,000. This duplex does need some significant repairs, but nothing crazy since this home was built in 1923. The duplex appraised for $95,000 subject to repairs. One unit currently has a tenant, but he only had a verbal agreement with the previous owners. He pays $250 in cash a month. I called him to let him know about the major remodeling and future rent change. I offered him first dibs on the application, but he can only afford $450 in rent. I did a quick internet search and emailed him 8 apartment options in the area in his price range. I also offered to help him move. He was really cool about all of this and plans on moving in the next week.

Financing

I did a traditional loan through a small local bank. We are doing the loan in 2 phases. Construction Phase will be interest only payments on the amount we draw for up to 1 year then I will refinance. I can refinance at anytime in that year. I will refinance into a 30 year fixed after we wrap up construction.

Estimated payments - My first construction phase payment will be about $66. The max it will be is around $248 if we draw the full amount. The 30 year fixed payments are looking to be in the $520 - $550 range. I hope to have the remodeling done in 1 to 2 months.

The Numbers

Purchase Price - $30,000

Remodeling Bid - $48,000

My Money Down - $12,448.53

Taxes - $1,300 / year

Insurance - $621.53 / year

Rents - $600 - $625 per unit

Tenants pay all utilities.

I am sure that I am missing some important details here. Let me know if you want other information about the deal. The Bigger Pockets Podcast was extremely helpful in this whole process. I felt very prepared to pursue this deal and get it to closing.

Just got the keys to my first investment property! Thanks bigger pockets for all the help along the way. I couldn't have done this without you guys.

Congrats on your properties! I have my first under contract. Getting inspections this week. I hope your properties are awesome for you and your family.

I go through this same question often. I am new to real estate investing. Our first purchase is in the contract phase. It is a duplex and we had to get conventional financing. I am on the conservative end and feel like a guy who owns the property (no debt) is better off in the long run. I don't think any person would keep debt around just to have it. The end goal will always be to eliminate the debt service no matter your risk tolerance.

Congrats on the duplex! We are working on a duplex deal now. Hopefully going to close in Feb. Is the basement shared space for each unit? The property I am working on has shared space and I was thinking about walling it off.

Congrats on the duplex! We are working on a duplex deal now. Hopefully going to close in Feb. Is the basement shared space for each unit? The property I am working on has shared space and I was thinking about walling it off.

@Robert Williams - Thanks for the input. I feel like a verbal agreement is meaningless. I need to get that contract going. I am not worried about code issues, but some may come up. I am an untrained eye.

@Jenna Stonecipher - Thank you for the wonderful advice. I am going to get the contract from BiggerPockets! I am going to get the home inspector going now as well. Side Note - Do you know any "stonecipher" people in IL? I know some folks in my area with that name.