First Multi-Family Investment

8 Replies

Investment Info:

Small multi-family (2-4 units) buy & hold investment.

Purchase price: $117,000
Cash invested: $15,000

First multi-family investment. 2 family home

What made you interested in investing in this type of deal?

Foreclosure sale, needed a lot of work, like the area, good cash flow

How did you find this deal and how did you negotiate it?

REO, online auction

How did you finance this deal?

conventional 30 yr loan along with some of my own cash and private loans from friends/family

How did you add value to the deal?

updated both kitchens, 2 bathrooms, flooring, paint,

What was the outcome?

cash flowing almost $600 a month!!

Lessons learned? Challenges?

Should have refinanced sooner and I should have got a plumber in there as soon as I bought it. I ended up having to open up walls to get access to plumbing after we had painted

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

No, I hold my RE license

Great job on this project! Nice numbers, you just need to rinse and repeat and you'll be good to go. Can you share a bit about your refinancing experience? Did you have the refinancing lined up ahead of time? Why do you say you should have refinanced sooner? What was the value after rehab? Were you able to pull out all of your original invested cash? Thank you for sharing all of these nitty gritty details are great for people learning along with you :)

@Erica Osborn This was my first refinance on a rental property.  I have a Broker who is a friend and takes care of all my needs - his only advice is to wait for more than 3 months before refinancing.  

I could have refi'd sooner but wasnt really critical in the numbers, only would have taken this property off the to-do list sooner.  I got some of my money back but not all of it.  I put in close to 20K of my own money into this and about 12K is still in the property.  Not a terrible amount but i'm sure some experienced investors would not let that fly!

Hope that helps! sorry for the late reply, I think I missed this when it came in originally

@Dave Grimson

What does each side rent for and what do you pay monthly for mortgage? Did you have to increase rents?

What was your monthly payment pre-refinance?

What was your interest rate pre/post refinance?

Sorry if the questions are a bit intrusive. Have a duplex I’m considering refinancing on but concerned about losing my good interest rate/cash flow.

@Tim Kaminski I bought as a foreclosure so the rents are what I researched to be at market value.  One side is a 2 bed 1 bath and rents for 1200, the other is a 3 bed 2 bath and rents for 1400.  Mortgage (principal, taxes and insurance)  was 1030 at purchase and now is 1320 after refinancing.  

Interest rate is 5.625 now and I believe was 5.25 at purchase

Hope that helps!

Originally posted by @Dave Grimson :

@Erica Osborn This was my first refinance on a rental property.  I have a Broker who is a friend and takes care of all my needs - his only advice is to wait for more than 3 months before refinancing.  

I could have refi'd sooner but wasnt really critical in the numbers, only would have taken this property off the to-do list sooner.  I got some of my money back but not all of it.  I put in close to 20K of my own money into this and about 12K is still in the property.  Not a terrible amount but i'm sure some experienced investors would not let that fly!

Hope that helps! sorry for the late reply, I think I missed this when it came in originally

Hey Dave! I appreciate that you kept some of your money in the deal. I feel lots of people have unrealistic expectations about the BRRRR concept. They feel they have to pull out 100% of their funds and if they can't they walk away. Their money is still there, it's just equity! People forget that and go on unicorn hunts, when they could be stacking up BRRRR after BRRRR of solid investments!

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