Hey biggerpockets community!
It's a done deal we have closed on our first duplex and first investment property. We are very excited and a little (or a lot) nervous at the same time.
We bought our duplex for roughly $80k. It's a 1/1 and 2/1.
Targeting $650 for one bedroom and $750 for two bedroom
Heat and Electric - Tenant pays
Water - Will work on RUBS
Kitchen - update cabinets with something clean and simple. Buy range and fridge.
Bathroom - update one vanity and redo tile
Outside - basic landscaping, some trees need to be dealt with but that's not an emergency.
There is also a large detached garage on the property. We were thinking of offering the tenants one spot per unit. The garage bays are not separated. I don't see an issue with that, is there something I am not thinking off?
PS Thanks to Biggerpockets for guiding us and helping us make it to our first deal!
Congrats on your first investment. The garage issue could be interesting, but I've never personally dealt with that. I think it would depend on how much room there is in this garage....the bigger the better.
I would begin thinking about your exit strategy....I know, I know.....YOU JUST BOUGHT THE PLACE! But if the market turns or something happens in your life that causes you to need to sell, you don't want to be caught unaware. Having a solid exit strategy will be very advantageous for you no matter what happens.
Best of luck to you!
The snowball starts with 1 snowflake. =)
Compound interest...woo hoo!!
Here here! Congrats on your first! Are you looking to purchase more after this?
Consider offering the whole garage at an additional cost to whichever unit signs up for it first. Alot of 1/1, 2/1 renters are not necessarily needing or expecting a garage space. I have a duplex with a (2) 2/1's. The lower unit has some more features, and we included the 2 car garage with it, partially to avoid tennants sharing but also because the unit is just more od a premium option compared to the upper unit. Rents are $1425 lower and $1075 upper.
You could treat the garage as a value add Charge additional $50 per space and see if you have any takers. You might need a space if you keep buying property you will come across supplies etc and a need to store. If you can' rent all of them put ad on craigslist someone will step forward for a garage for $50 a month.
I think I will advertise with a garage space included and the first tenant can have the option of renting the whole space as a value add. If the tenants don’t want them, then I can fall back on renting the space for storage. I may need to read if that’s an issue with zoning. Thanks for the ideas @David Rose and @Joe Scaparra
I'm getting into the place today to start removing the few kitchen cabinets, tile, and a vanity.
Congrats on you first deal! I can't wait to get my first deal done. I know a lot of fear and anxiety will go away after that first deal is made and buying the second will be twice as easy. As mentioned, then the snowball begins to form.
You mentioned not separating the garage bays. I’m admittedly a pessimist, but what happens when one tenant says something is missing from their car and they accuse the other tenant of stealing? That’s a mess
@Joe Ferguson That's our goal for this year. We wanted to get our first deal done and start learning. At a minimum this is an education for us. I have done tons of research and still nervous about getting the rent rates right. Learning a lot about materials and remodeling cost right now. In just a few weeks I have made a ton of mental notes on what to look for in older homes for the next one.
@Brad L. I have thought the same thing. To me it's not different than parking in the street next to your neighbor or in a secured parking garage, except it narrows down the number of people that have access to your vehicle.. If somethings goes missing then they can call the police and file a report.
@Damien L My thought's exactly. If I try to get it perfect the first time I will never pull the trigger. Like you said, the first experience itself will teach you a tremendous amount. Best of luck!
@Damien L. Right, but to me, it's obvious who's going to be accused; and with that, you would undoubted be dragged into it... "How can you rent to someone that stole from me" "Either I go or they go"
Again, coming from an overt pessimist. Regardless, congrats on the deal
I was in an apartment complex that had a 2 car garage to be shared, one per apartment unit, it also had two storage closets as well with a lockable door.
The other renter and I each had a door opener and they lived above us.
It worked great!
@Brad L. You are correct that it is a risk. I haven't made up my mind yet. I hope that one of the first renters will take the whole garage and that's something I won't even have to worry about.
@Joshua May Thank you for the feedback. I really like the idea of the storage locker. Because the garage on the property is very large and I would like to define boundaries for storage. I don't want tenants to start filling it up with crap. If you or anyone else has a good solution for storage lockers, I am very interested. Thanks!
Was just talking about this garage situation last night with a friend. They had a duplex with a large garage which was split between the tenants. One was fine while the other was a hoarder. The owner couldn't even get to the basement access door. I suggested a simple line of paint down the middle so there was no confusion on who's half it was. I also said there should have been wording in the agreement that there needs to be clear access to any doors, utilities, or storage lockers if you go that route. BTW, congrats! Looking forward to my first purchase as well.
@Elizabeth Connelly thanks for the input. You are correct at a minimum i will paint lines to define zones for storage. I will also add language to the lease that not storage is permitted outside the defined zones or storage lockers. And I will perform inspections from time to time. It worries me because we have lots of room in the garage and basement as well.
Originally posted by @Jason DiClemente :
@Damien L. congratulations on taking the plunge. Can I offer a suggestion? If the logistics of the property allow, why not treat the garage as it's own income stream? I'm sure there are people that need a secure space for their car, or boat, that would easily pay a couple hundred dollars to rent a large garage. If it were my property, that's what I would do.
This is what I am thinking, an extra $100-$200 in cash flow is a huge plus. Those numbers are sometimes what we are working with in the Los Angeles market on your main investment!
Congratulations OP, that sounds like an amazing first purchase.
Originally posted by @Alex Verdugo :
congrats on your first purchase. How did you finance the purchase? It seems like you're doing some renovations, was that figured into your budget when buying the property?
I'm looking around and still trying to find a multi family property that my family can owner occupy. it's all very exciting and nerve racking at the same time.
Best of luck to you on this property and to the next one.
I financed this through a conventional loan which can be painful since it requires 25% down when it's not your primary residence. I would love to go back in time and do a house hack when we bought our primary residence. That way you can qualify for an FHA loan. When we decide to move, I will definitely look into a nicer house with a separate apartment but that type of property isn't easy to find in my area. Good luck with your search!
That's a very interesting thought and something I am still exploring. One of the reasons I was attracted to this property was for the oversized detached garage which is a little over 700 sqft. Let's say I am trying to get a total of $1300 in rents. The options I was exploring were:
1. Rent units for $600+$700 (including a garage space for each unit)
2. Rent units for $500+$600, garage for $200.
3. Advertise for the units at $600 and $700 and if they don't want the garage I can still rent it separately and go over my $1300 goal which would be amazing.
The goal being to get the $1300 total that I would be seeking. There is also the grey zoning area of renting the garage for storage or business. And to add to the discussion you can clearly tell that the garage was used in the past for business.
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