All Forum Posts by: Brendan F. Nagle

Investment Info:

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

Purchase price: $40,000
Cash invested: $8,000

Up and Down Duplex. Both 2 bed 1&1/2 bath. First step into multi family. Produced solid cash flow for the last 7 years. Small town, good schools. Renovations include a new roof and new flooring.

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

I had just BRRRR my first SFH. My Dad said, do you want to partner on this one? Sure...

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

Lived in the town. Local investor cashing out. Place was vacant and offered for over 50,000. We offered 40,000 and waited 4 months for them to say yes.

How did you finance this deal?

Local bank. One cavet, I thought we had a 20 year fixed rate loan when purchased. We did not. it is variable. Working now to pay it off.

How did you add value to the deal?

New roof. Installed Washer/Dryer in the basement. New flooring throughout.

What was the outcome?

It has been a solid earner for 7 years.

Lessons learned? Challenges?

If you buy it vacant, put language in the sale to keep it vacant. Former landlord filled the building for 1 more months rent. We kept the renters. Long story short, eviction and an unplugged freezer full of meet became my problem. Since then smooth sailing.
Partnering with family can be fun...
Doing part of a roof first, instead of the whole thing right away got expensive.

Once you are ready, I like house Hacking. You can use the income in several different ways and the switch easily. IE. 1000 PITI - 800 rent = 200 PITI. Or the rent can be saved as a reserve or Down payment. Another is the rent can be used to cover carrying costs while you are rehabbing or selling a flip/rental.

Look for value add SFH or 2-4plex. I am currently house hacking in St. Paul MN. The upstairs is rented, and we are close to finishing the basement. We used our rental income to pay for part of basement remodel. Once done, we will have added 1bd, 1ba, and 400' of living space. We can enjoy that space, sell the home with forced appreciation, or AirB&B it on weekends. A more extreme idea would be live in the basement, rent out the main floor and be making money while we live for free.

Most responses will start that will depend on your situation and then ask for more details. It will come down to an equation. 

Desire to meet your goals * ability to make it happen = Meeting your goals.

My question comes down to are you financially ready to get into real estate. Your post says you are selling your primary home to pay off bad debt. Get you back to zero. But do you have the fortitude to stay bad debt free? 

@Nathan Killebrew

From my mom.

Get a good job with good benefits and you will be taken care of....

It still drives me to strive for FI.

@Mary Hitchcock

Life remains interesting, so I have always kept side hustles. I will list a few and the whys. Money isn’t always the main reason. Sometimes learning/honing skills or contacts is more important.

1. Battens or waiting tables. Low barrier to entry. Cash tips...

2. Selling cars: you here more NOs. Helps you listen for the yes. Can do part time. Commission only.

3. Volunteering at favorite charity of the job you want. Gives you a hand up come interview time.

4. Help with a rehab. Volunteer to learn new skills. Paint or mud drywall while you ask questions.

5. I once took a job stocking at a liquor store. Made contacts to use for a brewery sales job a year later.

15,000 to start. 10,500 would be 3.5% down on a 300,000 House Hack Duplex in my neighborhood. Try to get the seller to pay closing costs. Let's pretend here and Say you could do your own Renovations and qualify for a loan and can afford the PITI including PMI. You turn your side from bland to awesome. Then move to the other side and to the same. Renting for a premium each time. You save the rents until you can renovate the Basement. You move there. Now you are living for free and your Rental income can pay the PITI or build your reserve or next down payment on your next rental. Once you meet the Bank's seasoning requirements, Refinance or HELOC out some of the forced equity. Is it possible, yes. Is it likely... ehh.

@Nathan Killebrew

Compartmentalization is key. When with your friends focus on them. When jumping into fi find new friends on your path you can run with. Your old friends will get it after you prove it can be done. If not, move on from them. Good luck.

@Savannah Lewison

Go for it. I analyzed my first deal this way too. Over estimated the expenses. Incase I missed something. The big renovation budget should lower cap ex .

Income is over 2% rule. If you live in and self manage. Your cash flow will be larger than expected. Good luck.

I go more word of mouth. Find 3 meduim sized white collar businesses. Put a flyer on there cork board for place to rent with the phone number. Also talk to your friends family and co workers. Do you know someone looking for a 1 bd. I don't rent to friends, but I do take references.

I am almost done with my 2nd house hack. It is doable. Good luck. Find a 2-4 plex fixer upper. Bundle both loan and construction loan together. Make sure that fits your numbers and buy it. Confidence boosted. 

Then comes the harder part. Don't live in the nicest/biggest unit. Fix up the units as quickly and cheaply (you putting sweat equity) as possible. 1, 2, 3, & 4. You always living in the not finished parts. Put a clock on yourself. You find the best tenants. Maximize your cashflow. Use the cashflow and W-2 income to pay the PITI and fund a reserve for Cap EX and Maintenance. Clock is ticking, Once you are fully rented and stabilized, then start looking for your next hack. Be ready to jump once you have finished the residency requirements for the first one. Good luck out there.