Buy and Hold in an Opportunity Zone

4 Replies

Investment Info:

Small multi-family (2-4 units) buy & hold investment in N Charleston.

Purchase price: $125,000
Cash invested: $28,000

My business partner and I purchased this 2 separate building 2 family for $140,000 in an area that is up and coming in North Charleston Due to work needed, while under contract we got the sale price down to $125,000. The previous owner had been paying water/sewer, a manager and repeat repairs and therefore, was losing money. We came in, fixed a few items under a loan of $6,000 we took to use less cash. We replaced the roof, added a dehumidifier in one back unit and replaced an oven.

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

To start receiving passive income.

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

It was on the MLS. I saw it, looked at it and put in a full price offer the same day. I then had it inspected during DD and when we found work needed, I negotiated $15K off due to the repairs. The seller just wanted to get rid of it so she agreed.

How did you finance this deal?

Since it was two separate homes on one TMS#, Frannie and Freddie wouldn't back it so we had to get a commercial loan. It is a 5 year loan amortized over 20 years.

How did you add value to the deal?

We submetered the homes and updated the leases to have the tenants pay for the water/sewer. This saves us around $1800/year.

What was the outcome?

We have a solid, income producing home in an area that has a lot of talks of being turned around. So we have a good cash flowing property with great future potential.

Lessons learned? Challenges?

Don't hesitate, analyze then make an offer. Use your DD to verify numbers and research expense reports, rent rolls, maintenance needed, etc..

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

I am a licensed agent.

@Dan Rivers Your title said in an Opportunity Zone, but it doesn't sound like you are taking the tax advantages for being in an Opportunity Zone. Other than that, sounds like you made a good deal.

Yeah, I realized that afterward but couldn't figure out how to change the title. Good point though. I plan on doing minor upgrades to keep it rented but it could still be a good opportunity later on with the talks of some upgrades going on around that side of North Charleston. We shall see but for now, it is a good cash flowing deal. We hope to buy a few more units this year in that area. They aren't easy to come by so we were fortunate for this opportunity.

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