All Forum Posts by: Benjamin Burket

Investment Info:

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

Purchase price: $48,000
Cash invested: $15,000

Contributors:
Christa Burket

3-unit property where all units needed updating. Was generating $250 per month in rent (yes, that's right). Renovated on weekends with my wife and my brother and got all 3 units rented. Monthly income is now $1,850 with very low costs. Great cash flow but tough area to find good tenants.

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

This was my first deal, and I always liked the idea of owning rental properties. My brother and I split the deal to share the risk and responsibility. We also wanted to help my father out since he was not exactly cut out for being a landlord.

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

My father owned the property.

How did you finance this deal?

Owner finance.

How did you add value to the deal?

Full cosmetic rehab on 2 out of the 3 units, which were vacant. Raised rent on the 3rd unit.

What was the outcome?

We now have all 3 units rented with amazing cash flow. It is difficult to find good tenants in the area, and collecting rent can sometimes be difficult. That being said, we have not had any "major" issues.

Lessons learned? Challenges?

I wish we would have just paid contractors to do the rehab, but at least I was able to get the hands on experience. It took us around 8 months to complete the rehab because we were traveling on weekends to the property. With the rental income we lost during that time, we could have easily paid a good contractor and kept our sanity :)

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

No, just ourselves!

Hi @Andie Wu, I'm not qualified to speak on legal issues, but there should not be any legal issues to living there year round as far as I know.  However, you will want to check into a few potential logistical/practical issues.  A few that come to mind are:

1.  Is there an adequate heating system and insulation to live in the property during the winter months?

2.  Along similar lines, is the plumbing run in such a way that it will be protected from freezing, or is the property currently winterized each year to prevent damage?

3.  Are the roads leading to the cottage serviced/plowed during the winter, or would you be responsible for that?

The answers to these questions could vary depending on where exactly the property is.  Your Realtor can hopefully track down all the answers for you.  Good luck!

 Nice article, @Ali Boone!  We are in Rochester, NY.  House hacking definitely works in our market.

@Beverly Anderson I would highly recommend listening to as many BiggerPockets podcasts as you possibly can if you haven't already. There really is no easier tool to get all of the baseline knowledge you need. Listen any time you're driving, doing dishes, laundry, it doesn't matter! Listen at 1.5x speed if you can! I have found that networking is extremely important, BUT it is honestly not very effective until you have a solid foundation of "basic" REI knowledge from podcasts, books, etc.

@Kenneth Crosby, good luck! Agree with others that it's all about the property. Obviously, some areas may have a few more opportunities than others, but I would start with areas that you're more familiar with first and expand your market knowledge from there. Where do you live? I'd be happy to share contacts or advice anytime. 

@Beverly Anderson non-investors are always warning against the risks of investing (that's why they aren't investors).  People fear what they do not know.  A good question to ask is do you want to have a financial life and career that look like theirs?  A good tip is to only listen to advise from those who have been where you want to go.  Otherwise, you're looking at the wrong map :)

Hi @Wesley Blue, I have had good luck with CNB, but I am sure there are others in the area as well.  Try contacting Adam Smith from CNB.

Hi @Beverly Anderson, your Realtor should definitely be helping you find multi-family properties if you're looking to house-hack.  If your agent isn't familiar with investing, then I would suggest getting a new agent.  Also, it's typically not beneficial to have a partner in a house-hack in my opinion.  House hacking is a great way to get started with favorable financing.  Just because you don't have a partner on your house hack doesn't mean you should be "doing it alone."  It is always beneficial to be networking with other investors in the area.  Bouncing ideas off of others and getting direction/encouragement is easy to do without having a formal partnership.

@Bruce McKenty, that is a beautiful house, but it doesn't look like a deal to me.  It might be a good gig if you want to live in a nice house while having a tenant pay a part or your mortgage, but I can't see you cash flowing as a strict investment here.  You do not have anything factored in for maintenance, capex, vacancy, or management.  Also, your taxes are $5,500, and the property is assessed at $139,900. If you buy this for anything close to $190, your taxes are going to sky rocket when the assessor gets a hold of the new purchase price.

Just my initial thoughts :)

Hi @Patrick Murat, I live in the Rochester/Finger Lakes area, but I grew up just south of Corning (I have a 3-family rental in Elkland). I'd be happy to connect. Where do you live now?