Investment Info:
Small multi-family (2-4 units) buy & hold investment in Ypsilanti.
Purchase price: $225,000
Cash invested: $12,000
This is my first house-hack in Ypsilanti, where I have rented since 2013. It is an up-down duplex, 3bed/2 full baths each unit with a garage and nice back yard. My monthly PITI is $1409. I rent upstairs out for $1275 and I rent one room in my unit to a friend for $300/mo for a total of $1575. That leaves me with an extra $166 every month that goes towards expenses. Plus I am saving $800+ that I would be paying in rent each month if I had to rent a place for another year.
What made you interested in investing in this type of deal?
I wanted to get started in rental property investing but I do not have a ton of capital. Using a low down payment loan and house hacking the property to lower my monthly expenses was the best way to get into my first property.
How did you find this deal and how did you negotiate it?
It I found this deal on the MLS and I negotiated with the other Realtor. I ran the numbers and told them what I could pay for the property and they accepted. It was listed at $242,500 and I got it for $225,000.
How did you finance this deal?
I used a 5% down conventional loan. I was paid a 3% commission on the deal because I am a Realtor so that also helped me fund the deal.
How did you add value to the deal?
I have already installed security cameras and updated all entry doors to keypad locks. I cleaned up the property's landscape to make it look more aesthetically pleasing. I installed digital thermostats and had the windows professionally cleaned (the tenants loved that). I will do some upgrading to the property as far as bathrooms and kitchens go. I will do some painting, and plan to update fixtures to make the place more modern.
What was the outcome?
Over this next year, I will upgrade the unit I live in and will get $1500/mo for the unit I live in. With some upgrades to the upstairs I could easily get $1500/mo next year as well..bringing my monthly cashflow to about $1,591. After accounting for an increase in taxes, repairs (5%), vacancy (3%), and cap ex (10%) the property will cashflow about $650/mo!
Lessons learned? Challenges?
This was a nice easy property for my first one as it helped me learn more about owning a rental and how to manage tenants. I am learning how to do general maintenance on a home as I have only rented my entire life and I am now learning the power of owning real estate. My main challenge now is acquiring my next property.
Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?
I am a Realtor so I represented myself.
