First Deal: Dormont Duplex
Investment Info:
Small multi-family (2-4 units) buy & hold investment in Pittsburgh.
Purchase price: $183,000
Cash invested: $3,000
Owner occupied duplex. This is my first property and was purchased from a pocket listing. The BRRRR method is being used on a 203(k) loan. After one year, the property will be refinanced and I will begin to look for other properties.
I am living in one unit with a roommate while the other unit is fully rented. I am currently paying $130 towards my mortgage and my tenants pay the rest. If I were to rent my unit out and subtract monthly expenses, I would have a cash flow of $400.
What made you interested in investing in this type of deal?
I began listening to the BP podcast. After two years of listening, analyzing deals, and building an algorithm, I purchased the property.
How did you find this deal and how did you negotiate it?
The seller went to a realtor to list this on the MLS. However, my realtor saw this and gave me the opportunity to tour before it was listed. We had come to an agreement before he listed it.
How did you finance this deal?
FHA 203(K) Loan.
How did you add value to the deal?
The FHA 203(K) Loan provided me with $25k to add to the home. I Added an additional bedroom to each unit, new appliances, new flooring, lighting, and painted. Since then, I have refinished the basement stairwell/case, laundry room, and I'm working on the front and back yard.
What was the outcome?
I was all into the deal for 4% down on $183,000 (including $25k loan). The initial ARV was $193k. Since then initial ARV duplexes are selling between $205k and $290k in the borough. Likely ARV would be close to $220k.
Lessons learned? Challenges?
Lesson: I recommend using the 203(K) Loan. While there is a lot of paperwork, this is a great program to invest with training wheels on your first property.
Challenge: The selling agent did not do his portion of the agreement by the selling date. Due to this, I threatened to walk away unless the seller completed the agreed to terms.
Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?
Michel Write (female) - Loan officer https://www.linkedin.com/in/michel-wright-3a968345/