This is my second post. My first post was when I got my first deal (8 unit apartment complex and 2 - duplexes).
Last Friday, I closed on an 8 unit apartment complex through an obscure local MLS site that is mostly lake properties. However, as a Newbie, I am searching every avenue to find my next deal. Driving into this website, I saw, what I thought, was an abandoned 8 unit apartment complex close to my area; (close to Birmingham, Alabama; specifically Jasper, Alabama)
I drove to the site and discovered that every unit was occupied. When I drove up, a nice gentleman came out of his apartment and we struck up a conversation. He told me that the original owner feel ill and let the place go. The new owner owns a business next door (which has nothIng to do with real estate).
So, as a Newbie and not knowing any better, I walked over to the owner‘s business and introduced myself. We spoke about my ideas for improving the property.
He told me that he bought it out of foreclosure just to keep the riff-raft out of the place. The place is in disrepair. I told him about me and my ideas of renovating the place. He was pleased with what he heard. So, out of nowhere, he offer to sell the place to me for $50k (the asking price was $60k).
Thank you Brandon Turner!! I should back up a little and say that I have been listening to an older podcast every few days (and every current one) and have read two of Brandon’s books so far).
In older episodes, Brandon had been talking about buying a trailer park with “owner financing”. So, with Brandon in mind, I told the owner that I probably couldn’t get a conventional loan because of the amount of repairs. I further, hesitantly, asked if he would seller finance the property. I threw out 5% (agaIn because of Brandon). He agreed.
Currently, the tenants are on ”month to month“ leases at $250/ month each unit Is a 2/1 with central HVAC. ThIs is well below market rent (even for these units).
I put $10k down and estimate the rehab to conservatively cost around $30k. We immediately gave 30 days notice that the rent would increase to $300/ month. Every tenant was happy that we were rehabbing the place (and know that rent in the area is at a minimum $500/ month). So, I have had no turnover yet.
My goal is to slowly increase the rent to market price over the next 4 years.
This bring my total of doors to 20 since my first purchase in June. There is a lot of work to be done on both purchases, and I don’t expect to see a dime from cash flow for a few years. However, I feel good about the start! Thank you BP community for all your outstanding advice!!