Small multi-family (2-4 units) buy & hold investment in Elgin.
Purchase price: $115,000
Cash invested: $50,000
This is a 2 flat with 1,906 sq ft and was built in 1969. It contains 2 bedrooms and 1 bathroom in each unit.
What made you interested in investing in this type of deal?
Reading Rich Dad Poor Dad was such an eye-opener. I decided that I wanted to be financially free. This was the first step to that path.
How did you find this deal and how did you negotiate it?
I had an agent. This was a short sale and the seller was desperate to get rid of it. I originally got it under contract for $165,000. When I was unable to secure financing for that price, I renegotiated it for $115,00.
How did you finance this deal?
I used traditional mortgage lending.
How did you add value to the deal?
I put 25% down and began paying off the note as soon as possible (extra payments). I have added several upgrades being new windows, roof, carpet, etc...
I know have (potentially) $120,00 in equity.
What was the outcome?
I still hold and rent it out. No plans to sell anytime soon. Perhaps I will cash-out refinance (I am just learning about this strategy) or secure a HELOC and use that money towards another property.
Lessons learned? Challenges?
1. Screening tenants is key.
2. Pay attention to rent increases in the area.
3. Conduct random inspections to ensure tenants are keeping the property in good(ish) condition.
4. If a deal might not work due to numbers, you can always go back and renegotiate for a lesser price. The worst they can say is NO but they could also say YES.
Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?
No. My agent wanted me to pay the higher price (MINE) instead of renegotiating for $50,000 less. She is extended family and I have never used her since.
Thanks for sharing your experience! The seller must have been desperate to sell it if they were willing to agree to such a large price reduction. Good on you for overriding what your agent said to do.
Thanks for sharing this!
@Joshua Schindlbeck that's awesome congrats!! Rich Dad Poor Dad changed my life as well!!
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