Investment Info:

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

Purchase price: $379,000
Cash invested: $60,000

This was my first purchase. It's a two family home in Salem. I currently rent out the upstairs unit for $2,500 per month and I live in the first floor unit. If I were to rent out the 1st floor unit I'd get $2,000 per month with a monthly cash flow of $1700 per month. This could be higher, but I chose to refi from a 30yr rate to a 15yr rate after to get a lower interest rate and have the home paid off by the time I was 50. I've used the large amount of equity I've built in this home to help make the down payments on my other 3 investment condos. This was the first of my investments and it's been the spring board to helping me acquire more properties.

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

It was during the low point of the market in Dec 2011 and I was eager to buy my won place and not rent. I was able to get this place at an amazing price and good rate.

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

I saw the house on the street while driving around town. I got an agent and place an offer at asking with a note from my my wife and I about this being our first home together and a promise that we'd take excellent care of the home.

How did you finance this deal?

I originally went FHA since I was putting down 16% and to get a lower rate on the mortgage. Since I was renting out one of the units I was able to right of 70% of the PMI to help off set some of this cost.

How did you add value to the deal?

Since buying the home I've put money into the house and have upgraded it most years. I recently had the home appraised and it came back with a value of $660K so the investments have really added value to the home and helped me get better rents for the units I rent out.

What was the outcome?

Considering I live in the home with my wife and son it's been a great experience. I have amazing tenants who actually help me maintain and take care of the home. I get to live for free in my own home since my tenants pay my mortgage and I've been able to see my 5 yr old son grow up in the house.

Lessons learned? Challenges?

I wish I had realized sooner that I could have used the equity I built from the home to buy other investment properties sooner. I could have purchased some great deals, but I was took focused on building up cash and never thought of using my home as the biggie bank for the down payments. It was another real estate investor that opened my eyes to this.

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

I used Sean Connelly from Remax in Marblehead as my agent and Fairway Mortgage out of Newbueryport to finance the home.