First Investment! (Small Multi-Family)

First Investment! (Small Multi-Family)

Real Estate Agent · Nashville, TN · Member since 2015 · 21 posts · 56 votes

Hi Everyone,

I just posted my first new member post, and figured I'd post my first investment here.

This property needed a lot of work. It's in a great location in Nashville that became highly sought after. It's a triplex that my wife and I bought about 9 years ago and have lived in one of the units since. We inherited tenants that have lived there for 20+ years. Within 2 months one of the tenants passed away and the other vacated. We knew the place would need to be a complete gut once we had vacancy. It took about 2.5 years to renovate the three units one by one. We ran into major problems with our subcontractors which cost us a ton of time and money. The place is finally all finished, filled with tenants and fits the neighborhood.

Heres some numbers...

Purchase Price = $221,000

Renovations = $85,000 + A lot of sweat equity and help from Father and Law.

Gross Income = $3,595

Cash Flow = $1,790

*My wife and I still live there. We decided to furnish one unit for month to month rental, which is going well for us so far. The other unit we rent is long term.

As I'm very new, if anyone has any questions I'd love the challenge in answering them for practice. It was a whirlwind getting this place done with a full time job and 2 babies under years old at home. But now that we're on the other side we're ready to go full steam ahead to the next one!

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MD · Member since 2017 · 8 posts · 8 votes
8y

HI Randall,

Can you go into more detail about the numbers? Did you use a bank loan to finance the renovations? How did you go about finding suitable tenants? Any advice on finding contractors? 

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  • Member since 2018 · 2 posts · 2 votes
    8y

    Great story, and the after pics are great!

  • Berkeley, CA · Member since 2017 · 4 posts · 0 votes
    8y

    Nice work!!! Awesome place....

  • Real Estate Agent · Columbus, OH · Member since 2016 · 2 posts · 0 votes
    8y

    Awesome! So how did you find the property and how did you get your funding?

  • Property Manager · cincinnati, OH · Member since 2015 · 78 posts · 20 votes
    8y

    1.3% return per month or 15.6% return per year is pretty impressive on your first investment property! That's around double the stock market average and even more when you take into account that you did/will leverage your cash to get a better ROI.

    How did you finance? 

  • Rental Property Investor · West Palm Beach, FL · Member since 2017 · 23 posts · 3 votes
    8y

    Congratulations. Great job!

  • Member since 2018 · 1 post · 1 vote
    8y

    Congrats Randall! We've recently purchased our own apartment in LA, so I know how much sweat equity is that. We bought it a year ago and still doing some works. Great house you got!! 

  • Rental Property Investor · Member since 2018 · 7 posts · 3 votes
    8y

    Randall,

    The units look great! What were the top three lessons you learned through the process? I am looking to purchase my first property....you story is very inspiring. Keep up the good work!

  • Rental Property Investor · Grove City, OH · Member since 2018 · 93 posts · 71 votes
    8y

    wow! that rehab looks amazing! Do you and your wife have a natural eye for interior design or did you have help?

  • Rental Property Investor · Mc Kinney, TX · Member since 2016 · 45 posts · 22 votes
    8y
    @Christopher Winkler Also in Dallas looking at small multifamily homes and the homes are overpriced. Sellers are asking $60,000 plus over appraised value. I can't make the numbers work on most I see.
  • Specialist · Dallas, TX · Member since 2014 · 900 posts · 392 votes
    8y
    Originally posted by @Tiffany U.:
    @Christopher Winkler Also in Dallas looking at small multifamily homes and the homes are overpriced. Sellers are asking $60,000 plus over appraised value. I can't make the numbers work on most I see.

    Exactly, sellers just have a number in their head they think its worth, we need to get it for a price the rents will be 1%, if not 2%, and that is not the case now, unless its a pile of junk in S. Dallas... Sigh, I am back full time to notes and starting an entity to buy NPN direct from the banks...

  • Buffalo, NY · Member since 2017 · 14 posts · 11 votes
    8y

    Great job on the rehab. How much have you learned from the first rehab? Do you think the next will be easier?

  • Member since 2018 · 1 post · 0 votes
    8y

    wow nicely done. I’m curious to know some of the learning curves you experienced renovating the units. 

  • Real Estate Agent · Santa Rosa, CA · Member since 2018 · 84 posts · 105 votes
    8y
    @Randall Barrett wow the remodel looks amazing! Great job and hopefully this provides security to your family for years to come!
  • Hartland, WI · Member since 2018 · 13 posts · 7 votes
    8y

    It's beautiful!

  • Rental Property Investor · Mobile, AL · Member since 2018 · 54 posts · 19 votes
    8y
    @Randall Barrett that is an awesome Reno. I like the railing for the stairs, very nice touch.
  • Insurance Agent · Bedford Texas · Member since 2017 · 16 posts · 7 votes
    8y
    @Randall Barrett Congrats 💪🙏☺
  • Investor · Wilmington, DE · Member since 2015 · 130 posts · 84 votes
    8y

    @Randall Barrett

    Congrats on the investment!  I recently purchased a live-in fix-and-flip and renovated it with some help from family with 2 little ones at home as well, so I know the time effort that takes.  Glad to see others doing it too.

  • Wakefield, RI · Member since 2017 · 19 posts · 3 votes
    8y

    Very trendy renovation! I love the black gutters with the white brick walls! Also wondering about the month to month rental. I am experimenting Airbnb and find your idea interesting. Do you switch tenants every month? What makes them come and go that quickly? Tourism, business...?

  • Rental Property Investor · Sonora, CA · Member since 2017 · 78 posts · 25 votes
    8y

    Nice work on the rehab @Randall Barrett! Keep up the great work!!!

  • Involved In Real Estate · Chicago, IL · Member since 2014 · 52 posts · 8 votes
    8y
    @Randall Barrett Amazing job! Congratulations on the perseverance.
  • Property Manager · Jacksonville, FL · Member since 2018 · 514 posts · 470 votes
    8y
    @Randall Barrett Super nice job!!! I love the finished product! May I ask what kind of floors you used for the rental units? Also how did you decide on a budget to use for the upgrades? We are upgrading our rental now and aren’t really sure if we are spending the right amount or not. Thanks and congrats again!
  • Rental Property Investor · Ogden, UT · Member since 2018 · 4 posts · 0 votes
    8y
    @Randall Barrett congrats! Your hard work and patience certainly paid off!!
  • Real Estate Agent · Nashville, TN · Member since 2015 · 21 posts · 56 votes
    8y
  • Real Estate Agent · Nashville, TN · Member since 2015 · 21 posts · 56 votes
    8y
    Originally posted by @Jacques Thelusma:

    Job well done, I know it was well worth it, any advice you would give someone looking to get a DUPLEX??

    Thanks! I'm not sure if I have any specific advice about getting a duplex other than buy it as your primary residence and "house hack" if you can.

    Other than that, whenever you get a "no" from a lender or get stuck in some way in your real estate journey, don't stop taking actions. It's what I've realized makes a difference for my life. Actions like networking, taking on home improvement projects that helps me learn skills that can be used in flips/renos, talk to more people about where I'm trying to go, listen/read real estate and business books, etc. Hope that helps!

  • Real Estate Agent · Nashville, TN · Member since 2015 · 21 posts · 56 votes
    8y
    Originally posted by @Cheryl Vargas:
    @Randall Barrett Wow! Looks great! That is great cash flow, too! Does your cash flow include subtracting 10% for property management in the future, as well as 3% for cap ex - as @BrandonTurner suggests?

    Thanks! I did include 3% cap ex and accounted for vacancy, but I did not include future property management. I forgot about that. I'll have redo these numbers soon! 

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