My First Deal and What I Learned

[David Mo]

I set a goal this year in my introduction post to own 1 property by the end of 2020. I purchased my first duplex some time in August and have successfully reached that goal. 

I wrote about my first purchase in the Deal Diaries forum over here:

https://www.biggerpockets.com/...

I wanted to talk about what I learned from my first purchase in more detail here and to see what others have gone through. Please share your thoughts! 

Mistakes I made:

1. I didn't check to see if the security deposits were credited to me. I was able to get my bottom tenant's deposit back after the deal closed but was unable to retrieve the deposit for the upper tenant.

2. I failed to consider the climate that this property is in. Because Milwaukee experiences cold winters, you're more likely to run into frozen/cracked pipes. I should have considered this and gotten a plumber inspection along with the standard property inspection. A few days after purchase I was notified of a water issue where water was pouring from the ceiling of the basement. I've since identified that it is at least the toilet that's causing the problem, but perhaps an inspection would have caught it sooner and we could have had the previous owner address it. 

3. Trust but verify. There were water issues in the basement that were addressed by the previous owner. After the fixes were made, pictures were sent of the dry basement, but had I went over myself to see the basement, I could have potentially caught the ceiling leak issue before purchasing.

4. While not a complete deal breaker, there was a tree that was basically hugging one of the walls of the property. I did not consider any foundational damage that this might have caused. I've since removed the tree myself, but still have a stump to deal with. 

5. This definitely depends on each case, but in my case it would have saved me a lot of headache if I made vacating the units a part of the deal. My upstairs tenant caused me a lot of headache while moving out which was not worth the extra month's rent...which wasn't even paid to me in the end! I now believe that if you plan to do any renovating / drastic rent increase, it's just cleaner to have tenants out asap. The bottom unit is currently renting for $900 while I believe the market rent is at least $1200. $300 of an increase is a lot for anyone to stomach...even if it's fair. 

6. I did not set the tone correctly with my lower tenant in the beginning and developed a friendship with them which has made it more difficult for me to make business decisions. While I was warned of this ahead of time, I think I needed to experience this issue firsthand due to my personality. 

What issues have you guys run into after closing? I would love to hear about your first purchase experiences and what you learned from them!