A 4-plex in a College Town- My First Investment

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

Purchase price: $123,000
Cash invested: $15,000

This was a 4-plex in C+ condition in what was then a small college town. It needed some work but it was fully rented and put a few hundred dollars in my pocket after expenses every month. I had read Rich Dad, Poor Dad, and this property fit the bill for something we could live in while going to school.

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

I was pregnant with my first son and my husband was in school, so we needed somewhere to live that could pay for itself and create income.

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

This was pre-internet for this sort of thing, so I drove into town and grabbed all of the real estate magazines from the Maverick. The unit count and price looked good to me and I called the agent. It was a buyer's market at the time so negotiating involved asking the seller to pay closing costs and being patient with our FHA loan.

How did you finance this deal?

FHA with seller paying for closing costs, our parents gifting us a small amount, and from our savings account. We practically had nothing!

How did you add value to the deal?

We did some cosmetic upgrades interior- painting, flooring; and painted the exterior while cleaning up the landscaping. We also had to do some substantial repairs on the sewer line.

What was the outcome?

We held this property for 7 years, most months it paid for itself and put a few hundred dollars in my pocket, then netted about $15k at closing. A great first experience!

Lessons learned? Challenges?

I learned how to property manage. I was able to start a property management company after this which got me through the crash of 2007.