All Forum Posts by: Nicholas Ludwiczak

@Joshua Kulenkamp

Welcome. I started in REI by house hacking a duplex. I bought a duplex, living in half fixing it up after work. After living there for a year, bought my current primary resident to live with my girlfriend and kids. I took some time off of REI because I didn't understand the value of paying someone else to do something I was able to do myself. I have since changed my philosophy and I am closing on another duplex and SFH this month.

I bought my duplex with and FHA loan with 3-1/2% down. I few things to consider is and FHA loan has a low barrier to entry but the HUD Insurance payment will be very high, in my case it was about 12% of my total escrowed payment. You can refi this after you get to 80% of LTV or better but you will pay closing costs or roll the closing cost into the loan as long as it's under the 80% LTV. You will also need to live in the building for at least a year with this type of loan. There are a few other maintenance type items like no peeling paint with this type of loan but your lender/agent can help you with these. You could also do this with 3 or 4 unit building. Another thing to consider is a duplex will not appreciate as fast as a SFH, at least not around me.

If I would not have moved in with my family, I would have continued house hacking, building out my holdings.  
 

One thing I wish I would have done better is to track my expenses better. I tracked them for taxes but didn't track or analyze what I was spending on CapEx, repairs, and maintenance. I have been spending all my cashflow on CapEx and maintenance without considering how that amount spent is proportionate to the amount collected.

I hope this helps some.  Connect with me if you have other questions or want to network.          

For a base The Richest Man in Babylon and Rich Dad, Poor Dad. After that, anyone of the BP books depending on your lane and interests.

For personal finance and budgeting The Total Money Makeover.

The most important thing to do is to take action. I read Investing in Duplexes, Triplexes & Quads and it made it seem so easy, I bought my first property. It isn't the best one but might have never taken action if I read too many books.

@Nick Robinson

Thank you Nick. The property has been doing well. I have spent more on CapEx than I anticipated but I also know I am increasing the value as I do them. The property is located in Marshfield, WI. It has appreciated to about $133,000. I negotiated to have closing closes paid by the seller and baked the other fees into the 110k total. I have been expanding rents as turn the units but I have a tenant that has been renting at the same rate for 4 years now. I am going to raise their rates by 2% next year because I think I am 10% below market. Do you escalate your rents every year for tenants that are re-renting from you? How do you determine the % to escalate them?

Investment Info:

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

Purchase price: $110,000
Cash invested: $3,850

I lived in one half for the first year, fixing it up while renting out the other half. I bought by primary residents after a year of buying this property.

What made you interested in investing in this type of deal?

I always wanted to own investment property after reading Rich Dad, Poor Dad and house hacking made sense since I could get it for 3-1/2% down.

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

I found the deal on the MLS (Zillow) and there wasn't much interest in the property giving me some leverage during negotiation.

How did you finance this deal?

FHA with 3-1/2% down. This was my first property and I was able to live in it for the first year.

How did you add value to the deal?

I am handy so I was able to put some sweet equity into the building.

What was the outcome?

The property is doing well and I have some good tenants in there now. It doesn't cash flow the best but for only putting about $4,000 down on the property, it's doing well.

Lessons learned? Challenges?

Always account for CapEx expenses, making your estimates higher when buying older properties.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Stephanie Spaeth, my real estate agent was great. https://www.realtor.com/realestateagents/stephanie-spaeth_marshfield_wi_1571653_55789890

I have an upper duplex that is about old linoleum and half carpet with the carpet being in the hallway, living room and dining room. As it is now, people walking around upstairs is kind of loud in the lower unit. I plan in replacing the dining room carpet with vinyl flooring since carpet doesn’t belong in the dinning room. I would really like to replace the hallway with vinyl and maybe even the bedrooms but I am concerned that removing all the carpet and replacing it with vinyl make the sound worse. I would use the more expensive “quieting” underlayment but I am not sure how that will compare to how things are now. Any suggestions are appreciated.