Investment Info:

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

Purchase price: $181,000
Cash invested: $20,000

This is a duplex that I bought in poor shape planning to get rid of bad tenants, fix up, raise rents and re-let.

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

This was my first multi-family investment to work toward my goal of obtaining passive income through small multi-families.

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

MLS. Negotiated through realtors.

How did you finance this deal?

10/1 ARM, non-compliant in-house loan with local bank.

How did you add value to the deal?

Evict bad tenants, clean up property, make minor renovations/upgrades.

What was the outcome?

Bad inherited tenants turned out to be REAL bad. Stopped paying rent after first month of ownership and had to evict them both at once, which was unplanned and financially difficult. Rehab was more expensive than planned because they damaged the units more than expected. Cleaned up quick with my contractor I've used before, but has proved difficult to re-let (likely because of the neighborhood).

Lessons learned? Challenges?

Inheriting tenants provides a huge unknown. Be prepared for anything and do background checks on them before purchase. Request ALL due diligence docs re: current tenants from seller.

From this deal I have decided to be more picky about the neighborhoods I invest in. In the future I will forgo a little profit to buy in a clean, safe neighborhood where vacancies are easier to fill.