Investment Info:
Buy & hold duplex in west Omaha.
Purchase price: $238,000
Cash invested: $59,500
This is a duplex in west Omaha on 108th and Fort St. It is on a corner lot and in a convenient location. Each side is 2 bed 1 bath and has potential to add another bedroom and bathroom in the basement. One side was occupied for $950 on a month to month lease and the other side was vacant and had some updates such as paint and carpet. Property had the same owner since it was built in 1974 and was well maintained.
I found this listing going through multi family properties for sale which come up very rarely on the MLS in Omaha. I thought why have I not seen this property as it said it was listed for 20 days and I check properties on a daily basis. I setup a showing the next morning with my agent and found out the property was listed for sale 20 days prior and then went under contract immediately, but the deal fell through and it became available online again. Instead of creating a new listing for the property the original one was activated and I believe it did not get as many eyes on it the second time around as it was not as visible as a newly listed property.
I walked through the property with my agent and a trusted contact and submitted an offer the same day.
I financed this property with 25% down and got a rate of 3.75% on a fixed 30 year loan. I decided not to do the value add right away as we were in the prime renting summer season so decided to rent the vacant side as is at $1200 and sent a notice to the occupied tenant that their rent would continue at $950 for the following month, but would then go to $995 and continue on a month to month basis.
This is my first multi family property and has gotten me eager to find more small multi family properties in Omaha!
What made you interested in investing in this type of deal?
Was in the area that I usually target in west Omaha, knew it was a well maintained property, and was the type of side by side duplex I was looking for.
How did you find this deal and how did you negotiate it?
I saw it while casually searching multi family properties for sale at 2am to see if by chance I had overlooked something. Waived the full inspection as I walked through the property with 2 trusted contacts and created urgency in getting it under contract.
How did you finance this deal?
25% down on a fixed 30 year mortgage at 3.75% interest rate.
How did you add value to the deal?
Decided not to add the value immediately, but rather rent out during prime season for tenants moving in and make a slight increase in rent on the inherited tenant to keep cash coming in. At some point in the future when it makes sense will add a bedroom and full bathroom in the basement.
What was the outcome?
Successfully placed a tenant on the vacant unit at $1200/month and got the inherited tenant to $995/month for gross rents of $2195. Am close to the 1% rule that has been a metric I consider along with other factors. I like that some general maintenance items, insurance, and property taxes are not much different on this duplex than a single family home so am benefitting from the multiple unit scale. The numbers make sense and I like the long term potential of the property.
Lessons learned? Challenges?
This went very smooth overall. This was my first time inheriting a tenant and I felt comfortable as I had heard many stories and lessons on BP about going through this process. I still leaned on BP when drafting a letter to the tenant on the ownership change and increase in rent notice. If you have any duplex leads in Omaha please contact me!
