Hey BP community! Cheers to you! I wouldn’t suggest lookin’ for love at the bar, but sometimes you might just find an investment property. In this case it was a wonderful duplex. It’s been a few years on the sidelines, soaking up podcasts, educating and looking for properties that made sense day 1, finally got it. It’s been a long road to get started but incredible connections, confidence and education gained in the mean time. Very grateful for the community here Biggerpockets.

Investment Info:
Duplex, buy & hold investment. My first real estate purchase!

Purchase price: $140,000
Cash invested: $32,000
ARV: $195,000 (Zestimate for whatever that counts for)

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

Numbers made sense, home with potential on a good street.

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

Met the seller at a bar, asked him what he wanted. Afterwards, negotiated repairs including removal of knob and tube, asbestos and buried abandoned oil tank.

How did you finance this deal?

Owner occupied property with an FHA - 30 year fixed.

How did you add value to the deal?

Remodeled: upstairs unit with new appliances, paint, complete bathroom remodel, fixed plumbing, refinished flooring. Downstairs unit with retouched flooring, new paint, new sink.

What was the outcome?

Built in equity, $225 per unit cash flow and 15.65% cash on cash ROI.

Lessons learned? Challenges?

Develop your criteria, then find the market or neighborhood to suit it.
Size of the start feels daunting, unsurmountable, overwhelming. Break it up. Write your goals daily.
Don’t judge a book by its cover.

Story:

Last April, at a local bar, my friend and I are talking real estate, talking to the bartender and a fella in the corner speaks up mentioning he’s got a multifamily for sale. Upon first glance you might not have expected what was about to unfold, this man held the opportunity I was searching for, and lesson: ‘don’t judge a book by its cover’ resurfaced again. No thinking much, we started talking, and I asked him what he wanted, the price that evaded me for so long (<$150k for a duplex), this home was bleeding him. He recently moved to a single-family ranch for his dogs, and left his unit vacant while the first-floor unit was paying half of market rent.

Here I thought it was impossible to find a deal that made sense, and from all possible places, talking real estate, here comes a man at the local bar, holding the deal I have been searching for. Not only that, he was a great human being, just did not want anything to do with the house/headache. Come to find out, seller spent his time protecting animal’s, volunteering his time refereeing woman’s lacrosse across the state, and was a local firefighter just was not cut out to be a property manager.

Soon after we arranged a time to go check it out, needed a lot of TLC but was a diamond in the rough. We proceeded to work on terms and how we could make this transfer happen off market. Upon home inspection, it was uncovered that there was knob and tube electrical in the house, there was asbestos pipe coverings, as well as unknown pipe fill and vent pipes (sign of an oil tank). Fortunately, I was able to negotiate with the seller that he take care of the issues before purchase. These repairs must of cost him $6,000 until it came to the issue of the oil tank. Evidence showed it likely lie in the yard, and the cost to locate and remediate the tank were steep. At this point I was investigating oil tank removal and remediation and costs are difficult to predict, costing upwards $100k if oil were to spill in neighboring properties. Exploring strategies of self-removal, and professional removal services, I decided that it was too much risk. I had to walk away from the deal, seller wasn't willing to remove the tank at this point. I let it go.

Weeks later, the seller called and said he found someone to use ground penetrating radar at the suspected locations for $200 as opposed to another company looking for 10x that amount. We found the tank, and seller was thankfully able to remove the [dry] tank for a total of $4,000. Game on.

Fast forward, I was able to purchase the property for $140,000 as owner-occupied with a buddy living in my unit with me, I remodeled the home with help from my father from December to February so saved probably like $10,000+ in rehab costs with his help and counting our time as zero dollars per hour. I was able to land tenants in both units by April of this year netting $2,320 per month with about $1,111 in PITI obligations. Taxes are very high here in Connecticut so looking at the 1% rule, it is more like a 1.2% rule round here.

Before (upstairs unit):