Four Plex #1

[Sophia Hayden]

Investment Info:

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

Purchase price: $1,040,000
Cash invested: $82,000

Attached 4-Plex of Beautiful Townhomes ~6400 sq ft:
> Unit A + D (Each): 3/2.5/2 Car Attached ~1610 sq ft'
> Unit B + C (Each): 3/2.5/1 Car Attached ~1610 sq ft'

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

I accidentally stumbled across house hacking after my offer went in (BiggerPockets Rookie Podcast). The math made sense. I was going to buy a SFH to live in solo for $4k/month.

If only 1% appreciation, I pay down ~$1k month + ~$1k in appreciation. Learning skills, living there, and out ~$2k/month out of pocket vs. $4k. Net $0 impact (live for free while learning).

Eventually PMI gone (~$330/month), I move out to rent my upgraded unit for ~$1800. Cash flow ~neutral upon moveout.

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

Zillow. Had a realtor friend I then approached on the deal. Luckily had a lot of prior home purchase experience and worked for a major SFR operator who scaled from 25k to 35k doors...

How did you finance this deal?

1. Owner occupied 30-year conventional financing w/ 5% down
2. I borrowed most against from 401k.
3. EMD + Cash Due at Close net of prorations, concessions for closing costs + rate buy down to 6% (~$33k)

How did you add value to the deal?

PRIMARY: ~ Being a responsive landlord who wants to make home, a home ~

Also:
1. Initial Stabilization Cash Investment (Roof/Drywall/Leak Repairs/Garage Doors/Washers and Dryers, grout repair, full recalk/grout repair around exterior, all items flagged on inspection report, etc.) ~$16k
2. Unit B Rehab (> 1k sq ft Vinyl Plank Flooring, Drywall Repairs, Updated Light Fixtures, Backlit Mirror for Primary Bathroom) ~$11k
3. No Rehabs in occupied units.

What was the outcome?

Was able to:
1. Build out a reliable contractor list
2. How to properly landlord
3. Build a rental system that's scalable
4. Gain the confidence to scale
5. How to analyze deals
6. How to stabilize four units
7. Do a successful lease renewal
8. Navigate in a zen headspace the surprises during the closing window (appraisal miss, inspection report, close).

Lessons learned? Challenges?

I learned I can do this!

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

Message me for recommendations. I would recommend my lender, realtor, insurance agent, lawyer for quick claim, and home inspector.