Closed on a fourplex!
Hello BP!
Just wanted to share our first deal (woot!):
Two duplexes on one lot, single story. All 4 units are 2/1s, about 750 sq. ft., W/D hookups, and a not-so-private patio for each unit. Gross rents are $2235, fully rented (2 section 8, 1 applying for section 8, 1 without assistance)
Sale price was 215k. The seller, his agent and my agent ended up contributing about 3k total. I needed about 60k to close (25% down plus reserves). I had 20k of my own money, 40k from my father-in-law. With both loans, it should cashflow about $160/month.
Currently, base rents are $515, $535, $545, and $525. We are in the process of raising the base rent to $625/month. If the tenants decide to leave, we'll probably go for $650. Plus a consistent pet rent of $25/animal/month. The current tenants have between 1 and 4 pets each! 7 cats, 2 dogs, and some kind of caged rodent over the 4 units. Yikes!
I was starting to write a list of stuff I learned in this process, but it was becoming way too long and involved. A big thanks to Josh, Brandon, everyone involved with the podcasts, and all y'all BPers. The collective intelligence and experience of everyone on here has had a phenomenal impact on my present and future! Thank you!
Great job taking action! I love small multi's!
Congrats, Wow you're definitely doing it. You took ACTION like @Brandon Turner always highlights. And I'm sure you'll be able to raise the rents in no time. The animal fee is a very smart idea. Once you get new tenants in there, look into a non refundable animal deposit ($100-$300) due when they move in. Look into storage fees ($25-$75) as well. That's a great way to raise the rental income. If the W/D was in the basement and not in the units, I'd make them coin operated to offset cost of water.
Mike
Sorry for the late reply. It's a whole new world dealing with tenants!
Thanks! Taking action was a big hump for me to get over. By storage fees do you mean, converting some unused space to storage and charging? The buildings don't have a basement but I have thought about trying to carve out some space. The W/D hookups are in the units, so no coin-op there. Maybe individual water meters, though.
Thanks! I hope to get more in the near future.
Congrats
Keep your father-in-law happy :)
Make sense on the hook ups in the units. Yea try to see when you get the extra funds to carve some extra space for some storage, I just put in an offer on a 4 unit multifamily.
Doing a walk thru of the property, I saw how the owners weren't utilizing the space properly.
The basement is unfinished and just have so much wasted space.
I plan on putting two sets of coin operated washing machine and dryers and also carving out 4 storage closets that I will charge for ($25-$50)/month and I was thinking of putting a small gym down there..and charge a monthly fee of $10 a month.
A cash flow of $160 sounds great . But ill guarantte you wont see it. Youll be nickeld and dime to death. Your cushion is way too small for a guy who put down less than 10 %.
Unless you take care of everything with your own sweat and labor.
Originally posted by @Michael Durand:
Congrats, Wow you're definitely doing it. You took ACTION like @Brandon Turner always highlights. And I'm sure you'll be able to raise the rents in no time. The animal fee is a very smart idea. Once you get new tenants in there, look into a non refundable animal deposit ($100-$300) due when they move in. Look into storage fees ($25-$75) as well. That's a great way to raise the rental income. If the W/D was in the basement and not in the units, I'd make them coin operated to offset cost of water.
Mike
Is nickel and diming section 8 tenants the way to go. Theres a reason the on SEC 8.
Thanks! I'm stoked.
@Account Closed
Agreed about the $160 a month. My goal is $100 per door. We're not quite there with rent increases but well over it once we pay off that first loan. And I am having issues with one section 8 tenant, the other one is doing fine. So we'll see how it goes.
Congrats on the purchase. The numbers on this one look slim, but one could start with worse properties, and I'm sure you will learn a lot!
@Matt Slakey congrats!! Good job👍👍
Congrats on making the leap! You'll likely find that you want to get rid of the section 8 housing and go a more traditional method. Your margins are slim, I'd do all the work possible for as long as possible to get it profitable and get your father in law paid back as soon as possible.
Congrats on closing your first deal! I'm curious about any deferred maintenance issues. My experience with section 8 tenants has usually been with properties that were maintained just enough to still qualify for section 8 folks. What sort of deferred maintenance issues will you be dealing with on these 2 duplexes?
160 is way too small. congrats on jumping in. good luck with everything
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Hey @Matt Slakey awesome!
Thanks everyone for the congratulations and advice!
As far as deferred maintenance, it needs new ridge cap shingles on one building and the downspouts to be put back in place. Those are pretty much the only urgent things. I would like to repaint the outside, it's a pretty hideous shade of teal, and replace the gutters.
@George P.@John D.@Jeremiah H.
$160 is cutting it close but we are raising rents about $100 per unit to bring it in line with market rates. We do plan to pay the second loan ASAP.
Those maintenance issues don't sound too bad. Best of luck on your new acquisition. :-)
Thanks again everyone!