Possibly a 2 for 1 on my First Deal?
Hey guys, I've been scouting for what feels like ages to find a good deal.
My search has been consisting of small multifamily houses that I can house hack. My original goal was to live for "almost free" while building equity. I needed a place to live and didn't want to rent anymore.
Let's break down the deals we're trying to close on...
Duplex - Asking Price 115k - Listed for Market Value
Offer accepted for 105k. Comes with Tenant on a 12 month lease renting out smaller unit upstairs for $575/month.
Bottom unit is estimated to rent for $800. Seller wants to live there for 2 months paying $25/day ($750/month).
Since the top unit is rented out, our original thinking was just to live in the bottom unit for a year. If we did that, our mortgage would be almost $400. Then we factor in utilities & setting money aside for payments, probably close to $900-$1000.
We just had it inspected and there was some big red flags...
- Roof in critical condition
- Lead Pipe for the Water Supply
- Mold in Attic/Basement
I'm curious to get opinions on the Lead Pipe, but our thinking is that we will just get the water tested. If it's clean, we will just test it once per year. It's an old house and every house on the street has the same Lead Pipe and not having any issues. We spoke with city water department and he said don't worry about it.
A full tear off roof would be $4200. Were going to negotiate with seller to give us some credit towards that, but I don't think that's too much for a new roof.
For the Mold, we're sending an inspector there Monday to give us an estimate. My realtor thinks it's not that big of a deal.
I had the thought...
What if we just found a tenant for the bottom unit and rented it out?
Both units rented out would cash flow about $500. We set some aside for expenses and are in the GREEN.
But we STILL need a place to live...
Right as our offer got accepted on this Duplex, a small SFH popped up.
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Deal #2
SFH - Listed for 55k - Offer Accepted 57k - ARV 87k
Needs about $10-12k work. Rents between $850-$900.
While renting out the Duplex, our mortgage on this house would be about $275.
We would have $300-400 in monthly bills.
Our goal is to live here for 'almost free' while fixing it up and bringing it up to ARV. Possibly cash out refinance and move onto the next one or just rent it out.
Originally we were only looking for 1 property to live in and rent the other side, but the only way getting the Duplex made sense was if we rented it all out.
The Downside on the Duplex is there isn't much value add. It's already one of the nicer houses on the street. It needs a New Roof, but it won't add much value. The good thing is, it'll be easier to rent out. We still would have to find a tenant for the bottom unit, bur that's the nicer of the two.
I do not own any property currently & if this all works out we'll have 3 doors paid by 2 tenants.
If needed, we could move into the Upper Duplex unit and cash flow about $200/month after setting money aside for repairs & such. But it's nice to live in our own house with no tenants next door.
So I'm curious to get your opinion on my setup!!
I know some people are against getting anything without a value add, but we were fighting against the clock.
My credit partner is losing full time status soon & going down to part time where she won't qualify for much. I don't qualify for anything with my work, so it seems like the only logical option here!