All Forum Posts by: Kara Leboeuf

Hello, earlier today I closed on my first investment property. There’s no turning back now, but I would like to share my experience for other newbie investors and also I would like to hear what some of the more experienced members think.

The home is a 3 unit in the Albany NY area. It is about 90 years old and in better shape than most of the inventory we saw in its price range. The purpose for purchasing this home is to live in one unit and rent out the other two while living as close to free as possible. And most importantly, while learning the ropes of REI. I know this will not generate cash flow while we live there but as we improve the units and move out in a few years I suspect this house will cash flow well and be a good transition into a buy and hold.

]The numbers:
Purchase price $135,000
Unit rents currently 400, 600, 800
PITI $600

The reason one of the units is renting for so low (400) is because the previous owner of the home (and 85 yr old woman) wanted to stay in the home until she died, so because of that we agreed on a low rate to accommodate her. Unfortunately we plan on moving into the $800 unit, so after we move in our income will only be $1000 a month. The good news is there is the possibility of finishing off the attic of this home and making the 2 upstairs units into split level apartments. Once we do that we estimate that each unit upstairs would bring in $750 a month, but we will cross that bridge when we come to it.

Approximate after renovation rents of units 750, 750, 850

As of now we are not living for free, we still owe approx $50 a month for the mortgage as well as our own utilities, and obviously repairs/ maintenance to the building.

Money down:
The closing earlier today was the most exciting. The short story is we used FHA financing and after credits from our lender, credits from the seller, and security deposits we ended up walking away with positive $2,440.00 cash. Purchasing my first investment with no money down, and even gaining some money was a real win for me and hopefully a good start to successful REI!

Please feel free to post any comment/concerns. Thanks again BP for all the help, I wouldn’t have been able to do it without you!

Hello BP, i have lurking this site for about 6 months now, and I'm glad to finally introduce myself. My name is Nick and I am from upstate New York. I am a recent college grad, and first caught the REI bug when I attended a free house flipping seminar put on by one of the "flip this house" guys. I'm glad I decided to pass on the $2,000 course that was being offered and instead go home and do some research online. Since I found BP I have been learning so much from the community here. I also have also found inspiration in the wise words of Robert Kiyosaki.

Personally my passion and interest is in multi-family homes. Brandons’ article about how to become a millionaire in 7 years really made me understand that building wealth through multi-family investing is possible.
As of now I am investing in the Albany NY area, and officially closed on my first home earlier today! I will explain how I used FHA financing and other suggestions from the BP community to get PAID $2,440.00 to buy my first home in another thread detailing my purchase!
(Link coming soon)

For now I would just like to say hello, and thank you all for contributing to such a prosperous and informational online community! If anyone is interested in chatting please feel free to send me a message, also if anyone in the upstate NY area wants to meet up for a coffee and talk REI / multi fam investing that would be great.

Thanks again,

Nick

Chris, that is exactly how I look at this deal. I'm thinking all the same things. Especially the fact that I'm paying of the place I'm living at with OPM. I think that alone is going to put me on track to be looking for another investment property sooner rather than later. Thank you very much for the input.

Thanks guys!

I do like the concept of moving into one unit and fixing it up then moving the tenants back in at an increased rate, but the rehab will be rather quick and minor so I think that shuffling all our belongings would be more of a hassle than its worth.

One of the leases expires in a few months. The other is on a month to month lease so depending on their contracts I may just renew them or we may have to renegotiate. I do think at this time when the yr. lease is up I will go in and make repairs and increase the rent to market value.

I don't think I will have a problem keeping it just business, well see. And as far as an inspection I will definitely have one done. Thanks for the advice!

Thanks David, you bring up a good point. I'm not sure as of now exactly what I would do about that situation. I do think they are easily rentable, especially after small rehabbing. My plan as of now would be to raise the rent of the more profitable unit, from $500 to 650-700. I would do this when his lease expires (April or may) so he has the opportunity to find a new place if he decides to leave. Once I get that unit all rehabbed and rented I would then rehab and raise the rent of the other unit in the same fashion. By doing it this way I figure I would be avoiding a possibly "mass vacentcy" situation.

Personally I am looking at the big picture as well, I don't plan on staying in this house for more than a year or so, so the majority of my time holding this property it would be with all the units rented out. In the fully rented out scenario I see a lot of money to be made, as well as a lot of lesions to learn seeing as this will all be new to me.

Any more imput, as of now I think I will be putting an offer in at 105k.

Thanks Erik!

I think that albany has some good niches such as college rentals and rentals for hospital employees. That is where I may find tenants paying 1.5x PITI while owner occupying, but some of those areas, such as college rentals, I would not enjoy living in.

So after running the numbers and sleeping on this purchase here is the bottom line.

After minor rehab $1.5k I could raise rents to 650 & 700 a month and live in the third unit. That woud, mean $1350 month on a $950 PITI, leaving $400 a month for repairs.

When I decide to move out here's what the numbers look like.
Rents would be 650, 700, and 725 which = 2075.. PITI is still 950, so useing the 50% rule this property would cash flow $500 a month when fully occupied.

What's the final word on this one guys? it would be my first property, I think It dose have a lot of potential, not only the property but also the location. Should I keep looking or start my investment now?

So self sufficient would mean the tenants pay 1.5x the mortgage? I honestly don't see that happening in my area. Maybe in a less desirable section of town, but I would not live there.

This property has a good layout for me ( one br open floor plan, nice deck) and is in an up and coming neighborhood with a a lot of newly renovated houses on the street as well as in the surrounding blocks. It's close to the heart of town with a short walk to grocery, dinner, bars, and just about everything.

First off thank you for your response,

The taxes and insurance was already calculated in..that would cost about 950 a month. Utilities are separate and paid by the tenants. If the apartments were raised to market value, 650 each, useing the 50% rule I would have to pay $300 a month to live there, because remember I'm living in one of the 3 units. As of now I live an an appartment where I pay about $1200 now...so paying $300 a month to cover the rest of the mortgage and own my own home doesn't seem like a bad deal to me. Am I still missing something?

Hey all, this is my first post on BP. It has been a wealth of info so far, so I figured I would ask for your input about my possible first time home purchase and becoming a landlord all at once!

Here's the situation. I found a 3 unit muti fam home for 129k. In my local city. The rents are all low for the area, all are around $500 a month but could be rented for 650 each with minor updating. The two tenants that would live in the other units have been there for 3 and 5 years. I have met them, the seem like great people. I would owner occupy the 3rd unit. The tenants would cover the mortgage with no money left over if I left the rents as is, but if I raised them to fair market value after doing minor repairs ($1-2k) then I would live in the house for free and have about $200 left over from collected rent.

This seems like a good investment to me. I don't plan on spending many more years in this town, but if I do move I figured I could fix up the units raise the rent and net 200-300 positive cash flow when I decide to move out.

Btw I'm useing a FHA loan for the property.

Any input or suggestions would be greatly appreciated seeing as how this is my first time buying a house as well as starting my investment portfolio, Thanks!