My First Real Estate Investment

[Michael Vedral]

Investment Info:

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

Purchase price: $325,000
Cash invested: $11,600

My first investment property! A house hack using an FHA loan bringing in $4200 in rents a month with a monthly cash flow of around $850 including vacancy and Cap-Ex allowances. I'm currently self-managing with some assistance from a family member that is a property manager.

Nitty-gritty info:
3466sq/ft 4 unit multifamily property.
2 bed 2 bath
2 bed 1 bath x2
1 bed 1 bath
A semi-finished basement that was rented out by the previous owner but was destroyed by that tenant and is currently unusable as a rental space.

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

I had an interest in multifamily and after listening to BP and other big investors, determined that a multifamily house hack was the best way for me to start investing with a positive cash flow.

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

I found this deal on market using Zillow after looking for a few months. After getting prequalified I was connected with an agent that helped me walk through the deal. The seller had initially posted the home for $380,000, after falling out of contract with another buyer they lowered the price to $350,000. I financed with an FHA loan and the FHA appraisal came in lower at $325,000 which we brought to the seller and they agreed to come down on the price and kept the 6% seller assist to close.

How did you finance this deal?

FHA loan with 6% seller assistance.

How did you add value to the deal?

House hacking (not really adding value)
The basement is semi-finished and has the potential to be another rentable space.

What was the outcome?

I was able to close on the property for only around $11,600. It was already tenanted with positive cash flow. I did find that the roof was damaged and needed replacing. But ultimately even with that setback, I feel like I had a successful first attempt at an investment property.

Lessons learned? Challenges?

Ask questions! Take a ton of pictures to be able to reference later. Don't believe everything on the market post. Don't be afraid to ask your agent questions, that's why they are there!

The lack of a team was a big challenge for me. I had only just met my realtor and broker and didn't really have anyone else to talk to. They were great resources. As a new investor, I would have been more comfortable having a contractor that I trusted take a look at the property during the initial walkthrough.