How This 22-Year-Old Bought a Duplex with 5% Down and Zero Experience

He had no money, no experience, and no idea how to renovate a house… but he still pulled off two real estate deals by 22.One of the fastest ways to get into real estate is house hacking a small multifamily property. But what if your first house hack also came with a leaking porch, a $3,000 electrical issue, and a car breaking down right after closing.Our guests today steal Evangeliste. Didn’t let any of that stop him. At just 22 years old, he’s two deals deep and showing a whole lot of puzzle.This is the Real Estate Rookie podcast. And I’m Ashley Care.And I’m Tony j Robinson and steal. Welcome to the Real Estate Rookie Podcast. Thank you for joining us today, brother.Hey, what’s going on guys? How are you?We’re so excited to have you on today, steel. Why don’t you start with telling us a little bit of your background and what your life was like before you started investing in real estate?Yeah, I think that’s a great place to start. So when I was about 15 or 16 years old, I had roughly a thousand dollars worth of bonds saved up for my grandparents. They were super old school and every birthday, every Christmas they would give me these bonds and once I turned 16, I’m like, okay, I’m going to time to cash it in. Took all the money from that. It ended up being rated over a thousand dollars and put it into a bunch of stocks. And at the time I was just putting in the hype stocks, a bunch of Apple, a bunch of Tesla, whatever. You can do what’s called a custodial account, which is where your parent allows you to buy stocks pretty much on their behalf. And that was my first introduction into investing. Long story short, I played around with the stocks for a little while, got introduced to real estate and said, dang, this is actually a pretty sweet gig. Once I got into it a little bit, I couldn’t stop it. Everyone calls it the real estate bug. Once I had the bug, I could not get rid of it. And the last five or six years, it’s been crazy. The amount that I’ve learned, the amount that I’ve experienced has been absolutely nuts and it’s been a wild ride.So let’s go over that first deal. How did you find it? Where did you find it and kind of go into the details of that?It was somewhat easy. I mean, throughout my entire college life, the three years that I was at Pitt, I was constantly checking Zillow, checking anything that was on the market, even some Facebook groups, seeing what was out there. I knew once I graduated and got hired for a full-time job that I would be house hacking immediately as soon as I could. So then once I got hired on, right after graduating, found this place in the town that I grew up, which is super easy when you do that because you’re very familiar with the market, with the prices, and even if you don’t care that much, you know where the nicer areas may be. So knowing that it was super comfortable to get into a house, especially when buying your first home can be wildly overwhelming. So at least having an idea that I’m buying a good place in what I felt like is a good neighborhood, that allowed me to do with some comfort that a lot of people probably don’t have. So anyways, this first deal, it was a two unit I house hacked one unit while doing a live and flip kind of situation and rented out the other one. So then you’re getting the benefit of having a renter over there while also getting the real estate experience, getting to flip it, and then eventually moving out and renting it altogether.And was this property just listed directly on the MLS?Yeah, this was an MLS listing. I found it on Zillow. I took so much pride and joy in this when I first found it. Looking back now is so stupid, but I was so dialed into looking at Zillow as soon as something came up. So when this house popped up, within two minutes I texted my agent and said, we got to get over here. This is $20,000 undervalued. We went over that night, saw it put the offer in the next morning, the sellers wanted to hold off on accepting our offer. They were hoping for a little bit of competition and after our time of time is of the essence ran out pretty much like the deadline on your offer. I went to my agent and said, how can we get them to move? We knew they didn’t have any offers, any other offers in yet, and she said, Hey, let’s just knock our price down a little bit and put the pressure on them to make a decision. If they’re going to keep playing around, then they’re going to keep losing out on money. So I ended up getting it for five grand under what I was originally offering and I was like, oh, this is even better. This is a great buy in the first place. Now I’m getting it for five grand less sweet.Yeah, that’s a good agent. I love that tactic like, hey, we’re just going to keep decreasing our price every X number of days until you say yes, and they can just literally see the money drifting away. What about the financing side still? How did you structure the financing for this first purchase?So leading up to this purchase, in my head the whole time I’m thinking I’m going to do a three and a half percent FHA loan. That’s what everyone talks about on Instagram or TikTok, whatever. In reality, if you want to buy a place that’s a fixer upper, you’re probably going to have to go conventional. FHA has a lot of restrictions on certain things just because they don’t want to finance a place that has a lot of work to it, it’s a little bit of a liability from them. It’s just a stricter way to get a mortgage for a house. Once I realized that I decided to go with the 5% down conventional loan, did 3% seller assistance, which is towards your closing cost, and that was a very affordable way for me to get into my first deal. Obviously I just graduated, didn’t have a ton of money in the bank. It was just everything that I made in high school and in college and the first month of full-time paychecks once I was doneSteel. Can you talk about that seller assist? What is that and how did you get it?Yeah, that’s my favorite strategy as an agent. Now for buyers who are trying to get into their first time home or even if they’re just trying to keep some money in their pocket, it’s basically a chunk of cash that the seller is willing to take off of their proceeds from the sale and put towards the buyer’s closing cost. So if you bought a house for a hundred thousand dollars and you got a 3% seller assist, the seller is willing to take $3,000 and put it towards your closing cost, essentially money in your pocket rather than coming down a purchase price. If you’re paying that over 30 years, it’s not going to change that much for your monthly payment, but getting it right up front is usually more valuable depending on your strategy, but for most cases that’s what the situation is.So still, you did a live and flip slash house hack. What was the rent situation and how did you increase the income on the units?Yeah, so when I bought the place, only one of the two units was currently rented out. They had it at $600 a month, which as is was undervalued by about 300, $350. So I walked in day one, got a renter into the unit that was vacant for $900, so that’s immediately 900 bucks more than what the previous owner was making. I moved into the unit that the tenant was currently living in, had to do the dreaded kicking them out kind of situation, but gave them a 30 day notice, which is tough, but they were on a month to month and it’s just something you have to do. They were super respectful about it. They cleaned the place up honestly better than I probably would have. It was absolutely spotless. Moved in there. It took me about six months to flip the place, but that I was working a full-time job and doing everything myself. I did all the work myself, didn’t outsource anything.Did you have any construction experience or is this a YouTube university story here?Yeah, disclaimer, absolutely none at all. I went to school for marketing. I grew up in the sticks so I know how to use tools and everything, but didn’t know anything about construction. But when you’re in a house that you own, the risk is very little. If I mess something up it’s like, okay, it’s my house. I can do that. Day one went into my bathroom, it’s a two bedroom, one bathroom for each unit. Went in and demolished the whole thing. I just said, well, you can’t go wrong here if I’m ripping down walls, ripped everything up. Within two weeks I had the whole thing renovated and what’s so nice about the internet now is I could watch tutorials on how to do full bathroom renovation, walked in and did it in under $1,500. Everything, tile, drywall, trim, new tub, shower walls, everything.You know what steel, I’m only about a three hour drive away. You’re hired. I mean two weeks for a full bathroom renovation while working full-time and learning as you’re doing it all is actually pretty good.Pretty impressive man.And for all under $1,500 too,Which is so lucrative if you’re trying to keep money in your bank essentially if you’re poor, that’s the best way to do it.I think there’s another hack now beyond YouTube University and I’ve been thinking about doing this or at least testing it out, but if you have chat GPT, they have the voice mode where can show chat GPT, your camera, and I’ve tried it with random little things, but I wonder if you could just show chat GPT, Hey, I want to renovate this bathroom or I want to install this tile, and I wonder if it would literally talk you through step-by-step on how to do it. I haven’t tested that theory out yet, but I guess if you get another live-in house hack or flip steel, you let us know and you test it out. I’ll definitely do that.We’re going to take a quick ad break, but when we come back we’re going to hear more from Steele on the unexpected renovations for his first property and how he financed his second deal. We’ll be right back. Okay, let’s get back into the show with steel. So what ended up being your biggest challenge on this property As far as renovations go?Yeah, the biggest challenge is definitely anything that you weren’t expecting to do. When I bought the place, obviously I had an inspection done and what you love about an inspection is they tell you everything that’s wrong about the place, even if you’re personally not going to be too concerned about it. So you have this whole list, they give you a report that says X, Y, and Z need to be done asap. Then there’s another list of things that need to be done within the next couple of years and then just some other maybe cosmetic things. I begin my renovations and taking care of the items that I felt were the most pressing and then within a month or so I get hit with the first storm of the year of my ownership and realize that my front porch roof is leaking right where it lines up with the house and this was causing rain to come inside of my siding drip down into the window that was right below it and then into my house.
Pretty much flooding my whole first floor because of this whole porch roof. $3,000 later, cash up front that weekend roofer comes over, takes care of it, drains my bank account. That’s done with next day. Right after the roofer’s done, my car breaks down, I take it to the dealership for them to do a recall. If anyone doesn’t know recall is pretty much the company, the car manufacturer paying for a repair. I took it to the dealership and the mechanic left my car door open, drained my battery. He went to go jump my battery and had the cables flipped, which then fried my whole computer system in my car and ended up being an $800 bill. But they covered it for me, but I’m like, how is this even possible? I buy this house we into a month. I spent all my money on this bathroom, just spent three grand on this roof that I didn’t know was an issue and now my car is completely shot because the mechanic hooked my battery up wrong. It was the perfect eye-opening moment. Landlord ship. I’m trying to get tenants in the house is just absolutely nuts.It definitely shows you how important it is to have reserves in place and to expect the unexpected to actually happen. So steel, let’s go into deal number two. So you’re 22 years old and you’ve already hit deal number two. Where did you find this deal?Again, not proud this found this one on Zillow. I like to take pride in my off market deal finding abilities. That’s part of the reason I became an agent because I was finding so many houses and I’m like, man, if I had the money, this would be cashflowing 1500 bucks a month. Just wild numbers, but I couldn’t afford it because it’s a $500,000 house. Find this one on the market. It just got forgotten about by people, by investors. Got it for $240,000, did the exact same strategy that I did for the first one, 5% down conventional loan. With this one specifically I did where the seller covered my transfer tax. The city of Pittsburgh has high transfer taxes. It ends up being 5% in total, so two and a half percent per party. Obviously didn’t want to spend that on a $240,000 house upfront. It’s still poor. I don’t have a lot of money and at some point you max out the seller concessions that you can get the seller credits like that 3% I was talking about. So this is another strategy to get the seller to help pay some of your upfront closing cost and then you get into a deal as cheap as you can end up being like 17 grand upfront to get into this house given the situation. That was pretty solid in my opinion.And for, yeah, $17,000 down for a $240,000 house is pretty good. Where did the 17,000 come from? Was this just from saving?The great thing about house hacking is it’s pretty easy to save, especially when I was done with my renovations, I was just pocketing almost all of my income from my job also sold off any possessions that I had that I didn’t care about. I had a snowmobile I sold that was like two grand and just kept saving up something that they don’t tell you when you’re trying to bounce from house hack to house hack is you need somewhere to live. So I needed to have both apartments income to help my DTI so I could buy another place so quickly I had to move back in with my parents for two months, which is like, who wants to do that after you’re already moved out?Hey, the sacrifices man. My mom welcomes me back home. I free meals.Well, they ended up kicking me out. They kicked me out. So then I had, luckily my girlfriend’s house is like 10 minutes from mine, so I went over to their house for another six weeks and I said okay. Every week was like a thousand dollars. I just got to put in my bank, they fed me. All I’m paying is for gas to go to my job. Ended up getting to save up roughly 30 grand At that point I said, okay, this is enough to where I’m comfortable buying a second place. Ended up getting this one, have the same tenant pretty much inherited the tenant that was upstairs, kept him there, had to move the first floor tenant out, which again, if you’ve never done that, it’s not the most satisfying feeling in the world to have to kick someone out. But he was cool with it. He kind of wanted to leave anyway, so it worked out nicely.And how are the cashflow numbers across your portfolio today still?Yeah, I mean, so my first property I have at a 7.35% interest rate. So to cashflow and that is not easy, but luckily it’s an affordable market. In my hometown I get roughly 300 to $400 a month. I set aside a lot for CapEx because it’s an older home. Something about the northeast is our homes are crazy old. This one’s from 1924, so you have to put away a ton of money for CapEx. I have something every month that’s going wrong with it. The second property, again, super old home, but the previous owner took care of a lot of the major items. It has new water heaters, new furnace, new roof, it’s a brick home, it’s really solid. Still things go wrong. So I put away a lot for CapEx right now. Obviously it doesn’t cashflow with me living in it as is. It would break even about $2,400 a month of income. Once I’m done with it, I’ll get 28 to 3000 of income, which will be about 400 again of cashflow. And that’s at a rate of 6.75%.The cashflow is good, especially in today’s market. And the thing that I’m really focused on though, as you’re telling this is that you’re 22 and one thing that I have really learned I started investing 10 years ago is that the value of your properties 10 years from now is significantly more valuable than the cashflow that you got over the years. And I’m just thinking you’ll be 32 years old in 10 years and what those properties will be valued at and how much your mortgage will be paid down by then in those 10 years and what the equity will be in the home. So congratulations on getting started so young.Well thank you. And huge shout out to principal. Pay down if you’re not doing that. I do an extra a hundred dollars a month towards my principal. It changes your interest that you pay over time by insane amounts of numbers. And also your loan. It changes it by five to seven years, even if you do a hundred dollars a month.Yeah, that’s great advice. And another one too is pay every two weeks instead of every month because if you pay your mortgage payment half of it a little bit early, it’ll reduce your interest paid over time too. Okay, so before we kind of close out here, steel, what do you wish more rookies knew about house hacking?House hacking does not have to be buying a duplex. It doesn’t have to be buying a quadplex. I know to some people that’s less than desirable because who wants to be a landlord to some tenant next door? A lot of people like to have their privacy. It is a big sacrifice that you have to do. And like we were saying earlier on, you sacrifice for the greater good in the long run. House hacking can be as much as living in your parents’ house, renting out a unit, renting out a room in your house, having your best friend pay you some rent even to just hang out with you. If you have a boyfriend or girlfriend, I charge mine $700 to live in mine. That’s house hacking. It’s just a way to cut down on your monthly payments that you’re making towards pretty much for everyone, your largest bill every month. And it’s super lucrative because if you’re going to try and cashflow $700 a month or a thousand dollars a month, that’s going to be very difficult to do. But if you have someone helping pay your own living expense, it’s pretty much doing the same thing. And then you get to put more money in your pocket, more money in your bank account and work towards what probably everyone here is listening to is trying to do.Well. Steel, thank you so much for joining us today and coming on to the Real Estate Rookie podcast. We really appreciate you sharing your journey. Where can other rookies reach out to you and find out more information?First place I’d go to is Steel Sells Steel City on Instagram. That’s my real estate account. We have an insane goal of me trying to hit $10 million in sales by the end of the year. Just started a video blog for that just to see how the journey’s going. So hit me up there. Obviously can DM me. I’m in BiggerPockets too, so you can find me there.Well Steel, thank you so much and I am Ashley. And he’s Tony. And listen to you guys on the next episode of Real Estate’s Rookie.