Hi, my Name is Garett Jacobs...Ive been in the trades since I was 18 though my dad was a painter so I was an subject to indentured servitude since from around l the age of 13.
I've lived in the Topsham/Brunswick area pretty much my whole life. I love Maine and New England in general.
So the first thing I should start out with is that I'm super green to real estate.
I don't really know a lot about real estate outside of what I've heard on the podcast, the people I've talked to who have purchased their own home, and any common sense I can muster (which isn't always a bunch).
I have a situation that feels unique although I'm sure isn't...though being a newb, I really don't know.
In the Southern Mid-coast Maine market things are a bit busy and Portland is the busiest. People are swarming and growth is happening.
We (My girlfriend and I) were subject to a renovation eviction and figured we'd buy a multifamily to avoid paying such high rents and eventually see returns after we renovated and moved out after the required two years.
So we've been staying at a friend's campground, for the past 5 months, that she owns over the summer and she said, "Why don't you buy my house?"
Hers is a duplex that they tried and were previously denied permitting to put in a third unit they had ALREADY built. After checking with codes population growth has changed requirements and it's now able to be permitted but needs a codes required sprinkler system (Roughly $9000) to be a livable three unit under the new regulations.
Without going into lots of boring details the short is I'm using an FHA 203k loan to bring it up to codes and then after a year plan to re-fi to pull out some of the equity to finish everything off and then move out after two years with the property making 1.8% of the perchase price monthly.
We purchased for $178k with a full mortgage amount of $200k for the improvements and the units are as follows:
4 bedroom 1 bath @ $1600/m
(2) 2 bedroom units @ $1200/m
The closing cost are being paid for by the seller and we beleive it will most likely appraise for somewhere around $230k
My girlfriend's aunt is a property manager that owns a decent size company and has been in the game for over three decades so we have a good source of information as well as a valuable resource for checking on background, credit score, and gut level opinions on tenant applicability.
It's definately a fixer upper but there's a lot to work off of and hopefully this is the start to the beginning of many more purchases.
If you've read this far and have any opinions to share or advice or criticisms to offer I'm more than all ears because I LOVE learning and especially about something that may well give me and my family financial security for the rest of our lives.
Thanks for reading
Welcome to BP and congrats on your first deal. Is it in Brunswick?
A 2% rental in my area is great....if you have done your research and find its a good deal compared to other properties available go get it. You will learn a ton from your first one. The one concern I would have is understanding and maybe getting some additional eyes to look at the property so you dont run into any major unforeseen repairs.
@ Cody Delong...Yes it is, do you know the area well?
@ Rajah Morrison...the second and third unit will be rented for 1200 each...the total monthly income at full occupancy will be $4000...so I need to make a correction and say that it will be a 2% instead of a 1.8% monthly return.
Thank you Adam Mitchell 😳 you are correct sir!
Hi Garett. I know the Brunswick area - I've actually been looking for multi-units in the downtown area of Brunswick, and have not found a good deal yet! The property price and rents you describe sound good if the units are in fairly good shape (i.e. rentable), and if the location is decent.
It's great that you have a background in the trades, it's really helpful to have those skills to apply to a fixer-upper. Indentured servitude is great training to be a landlord... speaking of which, your girlfriend's aunt is really a great resource. Ask her for advice ALL THE TIME, including who she uses for repairs when things are beyond your skill level.
Because you'll be living with your tenants, you really want to be careful... when you advertise the units, make sure that you let people know that the "owner lives on the premises" ... some potential tenants will screen themselves out, which is a good thing. Also take a look at utility costs - if you can separate them out and have tenants pay their own, it's helpful, because they treat the heat and electric use very differently if they are on the hook.
Best of luck, I think you made a great decision to purchase a multi rather than paying rent to somebody else. It's how I bought my first house, and it took me way longer than you!
Hi Garett, it sounds like you are turning the property into a good investment. Give the BP rental property calculator a try. It'll give you a more thorough review. Congrats on your first purchase!
@Tammy Richards Thank you for the insightful advice I really appreciate it!!! It's hard to find properties in the downtown area and a even a good deal if you do!!!
The Brunswick and surrounding Portland area is a little nutty right now and I feel ridiculously Humbled and Lucky to have chanced into the deal I'm getting...despite there being an overwhelming amount of updates to make. : )
@David Marshall Thanks for the heads up!...and I will give it a try, it sounds like a great resource to use and is one of the main reasons I LOVE this site and the podcast!!
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