In my article “The Simplest, Most Easily Achievable Way to Get into Multifamily Investing,” I argue that a duplex may be the perfect 90-day goal to get you started with apartment building investing and get you Keeps you on track of your financial goals. freedom. If you read that article, you’re probably wondering, “How do I buy my first duplex?” So here’s your checklist for buying your first duplex in the next 90 days.
90 Day Checklist For Buying Your First Duplex
Here’s what you’re going to be doing in the first four weeks:
Week 1: Educate Yourself.
During this week, you are going to complete a course or seminar or read all you can about single family home (SFH) and apartment building investing. While investing in duplexes is less complicated than larger multifamily (MFs), you still need to know how to find and analyze duplexes, raise money, and manage assets.
Week 2: Determine your investment area.
Decide where you are going to look. Since good duplexes are easily available, there are good chances that you can invest closer to home.
Connected: An FHA-financed duplex is an ideal first investment property: Here’s why
Week 3: Analyze 5 deals.
Here are the steps I recommend for analyzing and tracking your duplexes:
- Go to Realtor.com or LoopNet and find listings for 5 duplexes. Make sure you get the number of bedrooms, the square footage, and the rent they are currently getting from the listing broker. If they can supply you with expenses, that’s even better, but it’s not required.
- Create a spreadsheet where you can track your deals side by side. Include the asking price, your offer price, number of units, square footage and rental income.
- For each duplex, create a simple pros and cons summary. Use the rental income provided by the listing or real estate agent and assume you will have 10% vacancy per year. For expenses, you can use realtor.com’s figures (towards the bottom of the list) to calculate your real estate taxes, insurance and mortgage payments. I suggest purchasing a home warranty plan ($450 per year) with a $100 deductible. Then budget $100 a month for repairs (larger items should be taken care of by the home’s warranty).
Then answer these questions for each deal to determine whether the deal is a good one:
- Are the current rents in the market or are there opportunities to increase them? Find out by visiting Rentometer.com, which will give you average rents for similar properties in that area.
- What is the present or after repair value (ARV)? What is the cost of comparable properties? Are you getting a deal or paying more? If you are renovating the property, what is the ARV?
- What is Cash on Cash Return? Compare the cash flow of one duplex to the cash flow of the other. Does it meet your minimum return? Focus on deals with the highest cash to cash return (but at least 10%).
Week 4: Create your “Sample Deal Package” and start raising money.
If you’ve followed me for any length of time, you know that I strongly suggest that you learn how to raise money for your deals.
In this step, you create your “Sample Deal Package,” which looks and feels like the same document you provide to investors when you have a deal under contract except that you actually have the contract. does not occur under
Connected: How to Buy a Duplex: The Ultimate Step by Step Guide
So in the first four weeks, you laid the groundwork for what comes next: You educated yourself, finalized your investment geography, created your deal analysis and tracking sheet, and prepared your sample deal package.
For the next 60 days, you’re going to focus on two activities:
Activity #1: Schedule one investor meeting per week
Using the sample deal package you developed earlier, reach out to your sphere of influence and schedule meetings with people who might be interested in investing in your first duplex deal.
I’ve written extensively about raising funds here on Big Pockets, so please check out these articles for more details:
If you follow this step, you’ll have eight meetings, and at least one of them will agree to fund your first duplex.
If you have your money for the first deal, great! But I still want you to start the fundraising process now so you have the money for the next deal.
Activity #2: Make 5 Offers Per Week
Keep adding deals to your offer tracking spreadsheet and creating offers as you go. If you make five offers per week (not hard to do), that’s 40 offers in 60 days and your goal is to accept just one (a reasonable goal, too).
That’s it! Your 90 day plan to buying your first duplex.
Disclaimer: I realize that duplexes aren’t technically multidimensional, but so what? This is a step in the right direction. I’ve also simplified the process somewhat, so don’t blame me for leaving out some details – I can only cover so much in one article. My main goal was to open your eyes and open your mind to the possibilities. I also want you to get started with apartment building investing, and this is a great way to do it.
So if you think you need tons of cash, experience, or time to invest in apartment buildings, I have news for you: You can’t! Instead of giving up on that first 20+ unit deal, get a duplex deal. Once you have that, either do another one or shoot for something bigger.
Either way, you are in the game and on your way to achieving your financial goals with real estate investing!
Any questions about this process?
Let me know how you’re progressing with a comment!
Note by BiggerPockets: These are the views expressed by the author and do not necessarily represent the views of BigPockets.
