Wow...I've heard of some horror stories, about multi-family deals taking forever, then falling apart at the end, and we almost had exactly that happen. But in the end, after much persistence, perseverance and some dumb luck I'm sure, we closed on our first larger multifamily (26 units) last Friday, from 2000 miles away!
I'll spare all the mind numbing details (long distance, aging sellers, attorneys, conservative lenders...), but the process has taught me how different a commercial deal can be compared to any other SFR or small MFR I have done.
I do want to thank a lot of members on the forums here, as well as the many podcast guests, who have knowingly or unknowingly, helped me through this ordeal.
With that said...I can't wait for the next one!!!!
How exciting @Bruce Scannell ! Thank you for sharing with the rest of us.
I hope to acquire my first MF before the end of the year.
@Bruce Scannell congratulations! Don't spare us the details, I'm sure everyone would love to see your numbers and plans (I know I would).
Thanks @Ruth Bayang . It can be a trying experience, but keep at it and I'm sure you'll figure it out
@Bruce Scannell I TOTALLY feel ya! Congrats on your perseverance leading to success.
@Bruce Scannell Congrats!
Great to hear about your deal going through. I can't wait to get my first multi-family unit but am having a difficult time building the system to acquire them from out of state. Much kudos to you.
Thanks @Sarah D. . I would say the numbers are the easy part, it's just the intangibles that are hard to quantify and I'm sure are very dynamic from one deal to the next. We got this building for a cap rate of 8.5%, fully occupied. Its a value add play with the rents well below market, and the expenses higher than they should be.
Totally understand @Justin Young . What specifically are you working on? I really think, if you want it bad enough and work hard enough, the pieces will fall into place. Keep moving forward!
As others have said... please the details are what we are here for 😀
@Bruce Scannell Are you planning any building improvements as part of raising rents to market? Are you planning a long term buy and hold or reposition and sell?
@Bruce Scannell I'm looking to build a team from out of state where I can have boots on the ground that can analyze the properties I am interested in and give me honest feedback so I don't have to fly there everytime I see a property I'm interested in. That trust will take time but it seems as though many members have been successful.
@Bruce Scannell What is your management plan? Do you have someone you trust there or have you hired a property management company to do it for you?
WOW GREAT JOB!
@Sarah D. , yes and yes, depending. After the holidays, we will start the process of offering new leases to the tenants, building by building. Currently the 2 bds are the most under market, so we will start with those. The leases are all month to month, so it allows us to "easily" transition the tenants. I plan on offering the current tenants the opportunity to stay by raising the rent by only $25, but also instituting a RUB system, making them pay for the utilities. If they decide to stay we won't touch the unit, minus new windows possibly. If they decide to leave we will refresh the unit and raise the rent to just below market, while also instituting the RUBs. I think we should be able to turn each of the units in the next 2 years. At that point, depending on the market, we will either look to refinance or sell. I am the same with all my properties, if they have positive cash flow, I would prefer to keep everything, but if the debt service is too expensive, then selling is definitely an option.
I understand that @Greg C. , I've been in your shoes, but at the same time, I could almost write a book with all the "details", so if you ask some specific questions, I'll gladly answer as best I can...
@Justin Young , got it. Well, I would start with a place you have some familiarity with, if thats possible. Plan a trip there, meet with 3-5 realtors and 3-5 managers. I would meet them at existing properties, that you have done some high level analysis on, and see what their take is, and at the same time tell them what you're looking for and why. I suppose if you don't have a place like that, the same would apply for a new spot, but maybe spend some more time with these people touring, and asking more area specific questions.
It can definitely be done, don't be discouraged, but don't be too excited that you aren't open to the possible red flags...
@Kristopher Hanks , I current self manage my SFRs and duplexes, I do have a good support team there, however. For this building, there is a live in manager that gets compensated with free rent. They have been there for a long time and know the building and tenants better than anyone, so I will keep them and access their value for the first year or so. So far, I think they are worth it and plan to keep them for the foreseeable future.
Thanks @Rosston Smith , appreciate the post.
Congrats Bruce! I'm back in Michigan now, moved back from Oceanside over the Holidays to focus/speed up my portfolio. I was getting sick of trying to buy from far. Let me know if I can help out in any way.
Congrats, Bruce. Looking forward to seeing updates on your newest addition.
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