Small multi-family (2-4 units) buy & hold investment in Gainesville.
Purchase price: $209,000
Cash invested: $80,000
Distressed quad purchased in up and coming neighborhood in Gainesville, FL. Renovation included new roof, windows, exterior paint, landscaping, gutters, flooring, interior paint, light fixtures, switches, kitchen remodel, bathroom remodel, washer/dryer and window coverings. In-force rents were between $550-650/month. Achieved market rents of $850-900/month per unit post reno. 15.5% cash on cash. 60 day reno timeline.
What made you interested in investing in this type of deal?
Previous experience, we have several multi-families in this market and the numbers worked on the projection.
How did you find this deal and how did you negotiate it?
Realtor we worked with presented this property. Negotiated based on deferred maintenance, current rents and comparables. Asking price was $229k after some back and forth deal closed at $209k.
How did you finance this deal?
How did you add value to the deal?
Property rent rolls were significantly under market due to deferred maintenance. Plan was to renovate units cosmetically top to bottom and bring rents to market.
What was the outcome?
Month to month tenants accepted rental increase after witnessing owner investment in property (new roof, windows and paint was completed within 20 days of ownership). Vacant unit was renovated (see images) and rented within 30 days.
Lessons learned? Challenges?
Continue to expand your teams. You can never have enough handymen, electricians, carpenters in your rolodex. Project timelines can be extended if your go to service guy is booked a few weeks. Time is money!
Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?
Graciela "Dada" McGlynn is a great realtor in the North Central Florida area
Nice work, Elliot. Congratulations. Great to hear of the success of tenants being open to rent increase for added improvements on the home. Thanks for sharing!
What a transformation! Great job. Wondering if you had any inspections done before closing and/or new what the repairs were going to cost? Thanks for the inspiration!
@Deb S. I appreciate that. Our normal practice is to have an inspection done on the property. However, that is done mainly for major issues (foundation, roof, HVACs etc). We know going in (for the properties we favor) that it will be "x" per sq foot for flooring, paint, etc. - and more often than not we will have a strong gauge of an "all in" figure for a certain size sq foot unit and BR/BA combination. Mainly the repair cost estimates come from experience. We work with the same subs so we know where their bid is going to land.
When you say achieved market rents does that mean you already have them rented out for that amount? That neighborhood is generally one of the worst neighborhoods in Gainesville and tons of crime. I wouldn’t consider it an up and coming neighborhood in my opinion.
Are you going to manage the properties by yourself or have a local company do it?
If you were able to get those numbers it may be worth looking into doing flips.
@Jenn Barona we are familiar with the neighborhood and our opinion differs. The local Government has invested in the infrastructure immediately neighboring this subdivision (streets, commercial expansion) and new local business is on the rise in the surrounding area. While existing large employers sit on either side if Tower road. The assigned schools are highly rated and there are affluent communities in close proximity.
Other investors have achieved similar outcomes in this subdivision, hence our investment. We are out of town investors so we do utilize local property management companies. But I lived in Gainesville for some time so I am fluent in the communities. There are certainly some I would not invest in but this was not one of them.
This is half of the battle, being able to see diamonds while others see coal.
For sure. I know the city is making some changes to the roads and the schools are very high rated. I guess you got in way early than most would. That could be a complete benefit to you. Best of luck. By the way Dada is great! I’ve done some deals with her in the past and she has been wonderful.
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