My 2nd Househack Duplex
Investment Info:
Small multi-family (2-4 units) buy & hold investment.
Purchase price: $265,000
This property is my current house hack. After my previous (1st) house hack, I knew that my concept had been tested, but I wanted to free up cash flow, so I moved out of the previous property once this one hit the market, and I was able to negotiate with the seller on a good deal.
What made you interested in investing in this type of deal?
This deal sat for over a month on the market, and when I made an offer significantly below asking price, I didn't think the seller would accept it. Due to lack of other interest in the property, we were able to move forward. It was a duplex, side by side with garages which is actually what I initially wanted to purchase when I first became interested in RE.
How did you find this deal and how did you negotiate it?
This deal was publicly listed on the MLS. I ran numbers based on local comps for price, condition, and rent using tools like the MLS and Rent-O-Meter and offered a price that made sense.
How did you finance this deal?
5% down conventional financing. This loan option was recently introduced following COVID and was a better option than FHA (what I would have used instead), given that PMI was able to be removed at 20% equity, compared to needing a refinance to remove PMI if I went with an FHA loan.
How did you add value to the deal?
When I first approached this deal, one thing that stood out to me was that rents were currently well below market. Tenants were paying just over $800/mo, but market rent for this kind of property was closer to $1400/mo. At the closing table, the seller's realtor was adamant that I should just move on and try to rent to new tenants. 1.5 years later, with gradual increases, I still have the same tenants; they pay on time each month, and we are just about at market rent.
What was the outcome?
With confidence to send an offer that actually made sense, I ended up with a deal that most people moved on from. It took some manual labor on my part for the turnover, but I learned a lot and also have been able to continue to provide a great home to the tenants that just had poor management previously.
Lessons learned? Challenges?
I had only bought 1 duplex before this one, so my systems only consisted of lawn care. This property allowed me to expand to also consider HVAC maintenance as well. As your risk of issues on a daily, weekly, or monthly basis expands, the systems have to expand to be able to fix the issue at the root so it doesn't happen again. I also learned that it's totally fine to go with your gut and ask for something that you know may seem unreasonable when you know it's the most reasonable option.
Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?
I worked with the same lender that helped finance my previous house hack, Ruoff Mortgage in Lafayette, IN.