Small multi-family (2-4 units) buy & hold investment in Richmond.
Purchase price: $190,000
Cash invested: $1
Utilized the VA Home Loan to purchase a Duplex. Fulfilling the residency requirement and moving in tenants.
What made you interested in investing in this type of deal?
I wanted to jump back into another deal. Buy and hold is my go-to choice. Between being a new father, going to grad school, and a full time job, I wanted something somewhat turnkey and fairly passive.
How did you find this deal and how did you negotiate it?
Worked with my mentor's real estate agent. Negotiated down 20k off original asking price.
How did you finance this deal?
VA Home Loan; No money down
How did you add value to the deal?
We purchased from your traditional slum lord, so it wasn't hard. We inherited one great tenant and one bad one. We cut the bad one loose. Fixed up her unit (paint, carpets, etc.). Authorized a few small projects that our good tenant wanted to complete, refinished the bathtub, sprayed for pests/bugs, and cleaned up the outside of the property.
What was the outcome?
Despite coming out of pocket $2k to turnover the tenants, it was an overall decent experience. We put no money down to close, so we're not disappointed at all. The property currently has a new tenant downstairs, and we cashflow about $80 a door. Not a huge amount, but considering we're all in for $2k, thats a 96% ROI...haha.
This was our second deal, also a no money down, turnkey deal. Future deals will focus on BRRR'ing and stacking, so much to learn before we attempt our next deal.
Lessons learned? Challenges?
If at all possible, do not inherit tenants! We got lucky with one and no so much with the other. We still overpaid for the property, but my agent was also representing the seller. The seller had about 10 other units he was offloading, and I allowed the agent to smooth talk me into paying about $10k-15k too high.
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