Duplex in Poughkeepsie
Investment Info:
Small multi-family (2-4 units) buy & hold investment in Poughkeepsie.
Purchase price: $80,000
Cash invested: $72,000
Top and bottom duplex with 2,000 sq ft. Each unit has 3 BR plus bonus room 1 BA and rents for $1400.
What made you interested in investing in this type of deal?
The rent in the city of Poughkeepsie is higher compared to other towns in upstate NY. Total monthly rent is $2800 which made this a 2% deal after the rehab.
How did you find this deal and how did you negotiate it?
I found this deal on the Bigger Pockets Marketplace. I called the owner, walked through the property and negotiated over the phone. He originally asked for 85k and I offered 78k. We landed at 80k.
How did you finance this deal?
I used a broker I met on the Bigger Pockets site who helped me find a hard money lender at 11.5% and 2.5 points. This wasn't bad for a newbie.
How did you add value to the deal?
I updated electrical in the entire house, added new kitchens and appliances, did maintenance on the existing furnace and cleaned up curb appeal. Some surprises were the cost of replacing the deck in the rear, replacing more windows than expected and having to replace the entire back wall of the house due to a leak.
What was the outcome?
My rehab costs doubled but thankfully I had a few backup plans for financing the rest of the project (401k loan and credit cards). The house appraised for much more than expected (210k) and I was able to do a cash out refi and pay back the over budget money I borrowed (32k).
Lessons learned? Challenges?
Lots! The appraisal came back at 70k and I should've renegotiated but I was scared to lose the deal. Ended up hurting me at closing when my interest/points went up and I had to bring 10k more. I should have walked the property with a contractor before submitting an offer. While in contract, I should have gotten AT LEAST 3 bids. I didn't know any contractors in the area and ended up using my property manager which wasn't the best experience because we went over schedule due to other priorities.