Income Duplex - Saint Petersburg, FL

2 Replies

Investment Info:

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

Purchase price: $232,000
Cash invested: $48,600

My first property acquisition, a buy-and-hold Duplex in east Pinellas county close to many jobs. A learning experience. FHA loan with 5% down. Spent a lot of Cash on repairs. A break-even property, by my calculations, from a cash-flow standpoint.

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

Constantly rising rents in downtown St. Petersburg, FL made me want to be an owner rather than a renter. Before this deal, I did about 3 years of learning and research on Bigger Pockets and other resources. I also got my real estate license, but let it go inactive due to relentless MLS and Association fees.

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

Found this on Zillow. It was not listed on the MLS. The asking price was 280. I made an initial offer of something like 220.

How did you finance this deal?

FHA Loan. 3.5% down payment required. I put in 5% for slightly lower mortgage insurance.

How did you add value to the deal?

I did NOT add much value from an "Appraisal" standpoint, that is, something which would show up on an Appraisal. I did add substantial value from a "Rental" and "Maintenance" standpoint: New roof, aluminum wiring mitigation, added dishwashers, replaced air handlers, replaced hot water heaters, leveled fence, tiled bedrooms, added blinds, added ceiling fans and light kits, etc.

What was the outcome?

Outcome was that I learned a lot, and I now own my first rental property; it's only cash-flow break-even, but mortgage is being paid down at around $300 a month, and there is some appreciation. It doesn't seem to have helped me much at all from a Tax standpoint; CPA noted that my income (from my day job) was too high to claim certain deductions.

Lessons learned? Challenges?

It's important to be careful with your CASH IN. You want the lowest down payment possible, and you want for all of your deferred maintenance and repairs to be financed. I should have asked the seller to pay some closing costs, and for more up-front repairs, and I probably should have gotten a renovation loan instead of the regular FHA loan. Also, I really hated paying the "Up Front" mortgage insurance premium that FHA charges.

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

I was my own agent for this deal. The brokerage was Future Home Realty (FHR), which I would recommend to any agent who wants low fees but also minimal guidance/assistance/training.

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