About to purchase 1st MFH, specifically duplex in Philadelphia

9 Replies

Hello everyone, I joined a while ago expecting to be on the verge of buying but things happen and it got derailed for about 6 months or so.  My plan is to house hack in northeast Philadelphia area to start. This is my first investment and first time being a land lord so I am looking for something w minimal risk. I want something in a nicer area such as parkwood or fox chase that doesn't need a ton of work but still nice since me and my girlfriend will be living there for 2-3 years. I know the cash flow won't be there at first since I'll probably be paying over $200k for the property. I plan to keep expanding in real estate and down the line look for properties in other areas of the city that need more work or more "risk". 

If anyone could offer any advice or opinions at all it would be greatly appreciated. I am new, but motivated and very eager to learn as much as i can. 

Thanks, Jay 

Hello Jay,

I did something similar a little over a year ago.  I bought a live-in duplex in Bridgeport, PA that I'm planning to move out of in the next 2 months.  It was in livable condition when I bought it and just needed cosmetic updating.  I did most of the work myself to get my downstairs unit ready to rent and I still want to complete renovations on my upstairs unit (where I currently live) but I've decided to hire out most of this work.  It's been a great learning experience without a doubt but if I could do it again, there are a lot of things I would do differently.

Don't be too eager, as in don't buy something just to buy... be patient, run the numbers, be conservative with your estimates, make some offers and eventually you'll find a good deal. Make sure the numbers work now, don't assume that home prices or rents are going to increase. Be sure to factor in all potential costs.  Don't count on rents to go up or for the home to go up significantly in value - treat appreciation and rent increases as a bonus.  I recommend using the BiggerPockets rental property calculator and do some reading on how to estimate the different costs involved.

Thanks for the help. We're in the very beginning stages of looking now so we're just looking at everything out there right now so we know a good deal when one pops up. I have a lot of questions too pertaining to choosing the right kind of mortgage. What kind of financing did you use?

Hi Jay,

I did something similar in 2014 when I bought my first duplex in an area not too far from Fox Chase. I lived in half and rented out the other half. I am not in the process of making the duplex a triplex and hoping to get those fixed soon for more income.

When I bought my home, I used FHA loan and had a seller's assist which was helpful. Although, I think I did overpay on my property a bit too much because I was eager to secure my first property and some other external factors. Like someone else said, take your time looking for a good deal and make sure you have a great real estate agent in your corner--they will the task that much easier for you.

Best of luck!

Thanks @Jessica F. . I'm hoping I can get a sellers assist as well since the closing costs can get pricy. We have a family friend who is an agent that also has 2 rental properties so he is very familiar w our situation. It sounds like your situation is very close to ours as well. Do you pay a lot in pmi? Also is it true that pmi goes away once you reach 20% equity?

I am not an expert on PMI but I don't think it accounts for a lot and I think it is rolled into your mortgage payment and that yes, you have the option to cancel it when you reach a certain amount of equity in your home.

I would double check with a mortgage lender expert for certain. 

@Jay Sechowicz

First off, congrats on finding BiggerPockets and considering the House Hacking route...it's probably the best way to get started. 

When it comes to PMI (Private Mortgage Insurance), you will be stuck paying the monthly amount until you are able to show 20% equity in your property. You can either refinance your loan or pay for an appraiser to value your property.

Best of luck in your search.

I thought the PMI rules changed, and PMI is now for the life of the loan, if utilizing FHA?? Does anyone know this definitively? Thanks!

As long as it has been recently purchased through FHA (as of 2014ish) PMI must be paid on the ENTIRE length of the loan, unless of course you refi out of it once you reach 80/20. I am currently going through the same thing on my current house hack.