Purchase of 4010 Montgomery Rd in Cincinnati

3 Replies

Investment Info:

Large multi-family (5+ units) buy & hold investment in Cincinnati.

Purchase price: $415,000

Cash invested: $105,000 in just this building

10 Unit MF in the Norwood area of Cincinnati close to Xavier University with plans to flip tenants, remodel, raise rents, refi/heloc.etc, repeat and grow.

What made you interested in investing in this type of deal?

Primary interests include: The location/proximity to Xavier University, the Norwood area and main roads. The possibility of value add due to the previous owner taking care of it but not raising rents or renovating. I also felt it was the perfect size as a starter MF property for me and my available funds.

How did you find this deal and how did you negotiate it?

Found realtors through Redfin actually. They were great and kept up with me about new and upcoming properties along with showing me around the area. Negotiation was simple, I new the price I was willing to go to and that's where we met.

How did you finance this deal?

This was done as a comercial loan through US Bank. I attempted to go through a small local bank though I got screwed on the appraisal, lost $2500 with a BS appraisal and almost the deal. I was refered to the USBanker by the selling realtor and it all went smooth from then on.  He's now a realtor I'd add in to my next property search

How did you add value to the deal?

I've painted and laid new floors in the common areas.  It's been semi constly but I fee nice units and a crappy looking common area doesn't mix well.  I'm currently in the process of remodeling 4 of the 10 units to increase the rent rolls.  

What was the outcome?

Still in progress

Lessons learned? Challenges?

1. Small banks can be a good option but definitley don't forget about the medium size banks. While working with the mortgage guy at USBank and discussing the issue I had at the previous bank he said they basically just look at the numbers with larger MF complexes. He told me the amount they'd be willing to loan and I'd just have to come up with the rest. Apperently their appraisal was mostly just a drive by to verify the property for the most part.

2. What out for properties that need work prior to the purchse. Fortunately I didn't put all my eggs in 1 basket with my first offer since it fell through do to the seller. Once thing I learned from this failed purchase is put firm timelines on dates of completion with the option of you pulling out and or fines.
3. Keep on top of the contractor/s doing the work. If they start to slow down and become less responsive it doesn't mean they're shady or slow but sometimes the threat of bringing in another contractor lights the needed fire.
4. Things are bound to happen once the purchase is complete so don't over extend your funds.  

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Yes multiple

Hey Alex, 

As someone who invests in student rentals... I'm very curious to learn if you've been able to pull XU students? That's a tad north of the area most of my X friends lived during their time.... but the area is developing, so I'd love to hear how its going. 

All the best, 

Jake 

I appreciate the post. I have been curious to see how some of this goes when buying multi family units. Do you mind posting how you think the income/outcome would be for a property such as this ? I know some of it may be an estimation but I have been curious to see how long it would take to make a  profit from a deal such as this.  Thanks 

@Jake Walroth , I'll let you know how it goes with the students as soon as units start re-renting.  We just finished the first unit remodel and posted it for rent this week.  The posting is very XU focused but we'll see how the rentals go.  However, my contractor just happens to own a 3 or 4 unit on the next block and he said he's managed to keep students in his rental rotation fairly easily.  I wasn't really planning on focusing on student rentals but this one just happen to come up and being so close to the new development that's only a half mile away we figured why not. 

@Jay Fitts I'll definitly be keeping it updated as we start flipping the units.  Now that the 1st unit is ready we're finishing the common area and hoping to have 2 more complete by the end of the month.  fingers crossed.

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