11 Unit in Livermore, Maine
I’ve been wanting to start one of these from the start and just haven’t had a minute between my job and getting this deal done. The property is an 11 unit converted motel in Livermore, ME. Each unit is 1 Bedroom/1 Bath and sits on 7 acres of land. Purchase price is $275,000 and I will be financing 80% of the purchase price and the other 20% is all cash.
I found this deal through a contractor that I’ve done a good amount of business with on my personal residence and in some of his other ventures. I had him come out to look at a property with me and that property ended up having really bad foundation issues so I passed. However he mentioned that he had a property he was looking to sell close by so he could invest into a new project at this old ski resort he just bought.
We did not use real estate agents and are using my agent as a transactional agent only for a $1,000 flat fee.
Since bing under contract we had an inspection that went really well and some minor things will be fixed before closing like painting some exterior and redoing a ground level entry deck.
One big thing we ran into is one edge of one of the buildings is in a Flood Zone A bit with NO base elevation study done. Basically meaning FEMA has no big reason why the flood zone just skims one of the buildings. The owner never knew this due to a technicality with the mortgage. Essentially the land and one building is listed as one number and the building in the back is listed as another but the mortgage has the non flood zone number listed. We came to an agreement on splitting the cost of an elevation certificate and FEMA paper work and had the surveyors out yesterday. The company we used us a high % of success rate within FEMA on the flood plain changes for the ones they think they can appeal. This is one of those. I'll post an image in a future post.
The property currently cash flows $6500 a month and has the potential to cash flow more as the rents are under market. Also there is a laundry room that he currently doesn’t charge for, I’ll be adding coin op laundry and charging a small amount.
I’ve already selected a property management company as well out of a few I’ve interviewed. They came back highly recommended and have already made a great plan. I had initially planned on 10% but they are giving me a 7% rate which is meant more for people with 50+ units.
In my next post I will lay out the numbers a little better and show what I’m dealing with now and where we plan to be by end of year. I’ll also post pictures as well. My plan is to update this as new things happen.