Investment Info:
Small multi-family (2-4 units) buy & hold investment in Jupiter.
Purchase price: $460,800
Cash invested: $10,000
Duplex property with 3-bed/2bath units. Currently house-hacking this property: PITI payment= $2,700 (Includes $300 HELOC payment reimbursement to my parents), Monthly rent from one unit= $1,800. Between this property and my first duplex, my family and I are now living for free (both mortgages paid fully by our three tenants).
We bought this property using a HELOC on my parent's paid-off home, reimbursing my parents for the $300 monthly HELOC payment. So technically we only invested $10,000 of our own money into rehabbing the junkier side that my wife and I are now living in. Hoping to pull our own HELOC out on our first property, and then fully pay my parent's HELOC off in the coming year or two once our equity increases.
What made you interested in investing in this type of deal?
We wanted to continue our house hacking trend as what appears to be a deal for this duplex came from a mentor who was willing to sell it to us for $70k under it's market value. This duplex has one more bedroom per unit (total of 3 bedrooms per unit) than our first duplex giving my wife and I the opportunity for a Guest Room while devoting the third smaller bedroom to our newborn son.
How did you find this deal and how did you negotiate it?
One of my mentors approached me about buying it from him for $450k before he listed it on the market. We asked for a couple months to navigate openning a HELOC on my parent's property for funding the downpayment, during which my mentor listed it on the market. He received an offer for $520k with a couple scheduling terms that were unfavorable to his tax planning schedule, and we wound up negotiating a final purchase price of $460,800 once my parent's HELOC was finalized and funded.
How did you finance this deal?
Through a 30-year mortgage, APR 2.825%, with a local bank that allowed us to put down a 15% downpayment without PMI (they self-service their loans and can set their own PMI terms.) We took out a HELOC for $100k from my parents' property, paid off my wife's remaining $25k student loan, and put down a down payment of $69,120, and kept the rest of the funds for paying the first year's HELOC payments giving us time to build equity before we do a cash-out refinance to payoff my parents' HELOC.
How did you add value to the deal?
We bought the property As-Is, which involved us performing a minor roof repair, replacing a toilet fill-valve, and re-working an electrical panel to pass inspection in order secure a mortgage. Since closing, we have replaced the flooring with new LVT, updated all electrical trim, replaced a water heater and both washing machines, reinforced the shed's water-damaged trusses and resealed the shed's metal roof, painted throughout, and installed a glass shower enclosure.
What was the outcome?
We are now two months into occupying one unit and renting the other unit. Rent payment has been as expected so far. So, no complaints!
Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?
The seller's broker allowed him to take the property off the market and sell it to me without RE fees since we started negotiating the deal before the seller (who has his real estate associate license) listed it with his broker.
