Large multi-family (5+ units) buy & hold investment.
Purchase price: $295,000
Cash invested: $1
This is a 7-unit building in an amazing downtown location. The current rents are well below market and some rehab has already been done to 4 out of the 7 units. The purchase price was a bit under market, due to the below market rents. This will be a long term hold and we will slowly be increasing rents as leases come due and I will be slowly be turning units as they become available. When the building is stabilized, the monthly cash flow should be in the ballpark of $700-800. I was able to find a private lender to finance the entire purchase price because of the obvious upside potential and day 1 equity in the property upon purchase.
What made you interested in investing in this type of deal?
It was a nice sized multifamily property in the heart of downtown Covington with great proximity to a lot of big positive changes in the area.
How did you find this deal and how did you negotiate it?
I found it online on Realtor.com
How did you finance this deal?
How did you add value to the deal?
I will be slowly raising rents to be at market rate and will also be rehabbing the units that still need work.
What was the outcome?
So far, the property has had numerous small repair issues, but this is quite common for a building of this size in this condition. It will likely take 8-12 months to work out all the kinks and sort through the less than ideal tenant base and make the needed repairs upon unit turns.
Lessons learned? Challenges?
This was a bit tricky as the seller was not open to negotiating independent of the inspection. He was firm on his price and would not allow for any retrades. While this was less than ideal, the deal still had plenty of meat on the bones. I may have tried a slightly different tactic with regard to asking the owner to pay for my closing costs instead of for a discount on the property. This would have effectively accomplished the same goal I was after.
Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?
I work with an amazing agent in the area as well as a rock star PM.
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