Investment Info:
Small multi-family (2-4 units) buy & hold investment.
Purchase price: $115,000
Cash invested: $10,000
This is the first real estate deal that I have completed at 24 years old. It has 2 units; 1 bedroom 1 bath upstairs apartment, 2 bedroom 1 bath downstairs apartment. It is located in my hometown, I was able to buy this property in 4 weeks, with a long-term tenant already in place for one unit. I executed an eviction on the downstairs (Toxic) tenant, Since then I have moved into the two-bedroom unit and remodeled everything inside, while my upstairs tenant pays my monthly PITI.
What made you interested in investing in this type of deal?
I have a bachelor's in Finance and had the great experience of taking a real estate class in college. However, when the pandemic hit post-college, I did a deeper dive into real estate. I started to read books like "Rich Dad Poor Dad" and listen to BP Podcasts. I slowly became addicted to the topic. Using the resources and wisdom of Bigger Pockets has enhanced my knowledge and my drive for Financial Freedom.
How did you find this deal and how did you negotiate it?
Driving for dollars is how I found this deal. The house went for sale near my apartment and as soon as I realized it was a duplex, I called the realtor. Knowing the realtor helped me tremendously, I then got a pre-approval and submitted my offer contingent on inspection. Anything over $500 was the owner's job to fix, or he could lower the price. I was able to buy this deal for 10k cheaper than the listing price after two offers and some slight negotiation.
How did you finance this deal?
I used an FHA loan to finance this deal. I took an advance on my inheritance for the down payment and have paid for all renovations out of my own pocket. I bought the deal with someone else's money and have used some of my W-2 income, and sweat equity to double that investment via renovations and repairs.
How did you add value to the deal?
I have since completely remodeled the downstairs unit. The toxic tenant that was here before me had destroyed the walls and flooring with her two massive Great Danes that were living here. I have repainted everything, had the floors replaced in the living room and both bedrooms, and made this apartment much more desirable for the next tenant. For the exterior, the entire house and all 3 decks were soft-washed to remove mildew and moss. Those decks will be stained, while I landscape to finish.
What was the outcome?
I got to move out of my grandmother's home into an apartment for a year while using none of my own money for the down payment! House hacking has allowed me to lower my rent expense while building wealth for my future along the way!
Lessons learned? Challenges?
One lesson I find myself learning actually came from David Greene's book "Buy, Rehab, Rent, Refinance, Repeat". That is not to sweat the little things and pay for someone else to do them. I had planned on doing 100% of the exterior rehab until I realized most of that stuff is very cheap to pay someone else to do! This has given me back my most precious resource, "MY TIME", to look at other deals and small business opportunities. I hope to buy my next deal this year in 2022 because of this!
Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?
Chris Andiorio at Movment Mortgage, LLC was the lender for this. I highly recommend movement to anyone looking to buy they have the fastest mortgage product on the market and the customer service was impeccable. If you are in New York, I recommend giving Chris a call at 315-727-2154.
