Investment Info:
Small multi-family (2-4 units) buy & hold investment.
Purchase price: $320,000
Cash invested: $75,000
This was a live in flip duplex. We moved into the upstairs 1 bedroom apartment (after the bathroom was completely renovated) and then completed the renovations over the next year. We lived almost rent free as the second apartment was a 3 bedroom and covered most of the operating costs. We then renovated the downstairs unit and moved in as our family grew.
What made you interested in investing in this type of deal?
I was extremely motivated to purchase a home we could BRRR and live close to rent free. The location was excellent and I new we needed to dive head first even if the numbers weren't a perfect "deal".
How did you find this deal and how did you negotiate it?
This deal was on the MLS and was brought to me by my real estate agent. There were a small amount of negotiations around securing tenants in the downstairs apartment at the price they identified and cleaning up some odds and ends (asbestos abatement, fire safety items, etc.)
How did you finance this deal?
3.5% down FHA loan.
How did you add value to the deal?
Renovated both apartments while living in the house.
Upstairs - We spent about $28k along with plenty of sweat equity. Rents went from $850 - $1350 by the time we were done.
Downstairs - We spent about $47k again with sweat equity. Rents were at $1950 prior to the renovations and we still live here now. Looking to get $2200 when we move out.
We separated and updated the utilities. We expect to minimize cap x in the near future with this investment.
What was the outcome?
We own a beautiful duplex in a good part of Burlington. We refinanced out of our FHA loan and will be utilizing a HELOC and the money we've saved while living here to help fund the next purchase.
Lessons learned? Challenges?
- Make sure you stay on top of your contractors and ask the tough questions. Don't pay the final payment until you feel completely comfortable with their work.
- Appraisals can greatly vary. When we refinanced out of our FHA loan we got an appraisal for our home at $411,000 in November 2018. When we decided we were going to get a HELOC we had to get a new appraisal in March 2019 and it came in at $381,000.
- Don't put your pregnant wife through a major renovation. Happy wife, happy life.
Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?
I worked with Sheila Jacobs (real estate agent). She is knowledgable and has some investment properties of her own. I would recommend her especially if your new to investing.
