Large multi-family (5+ units) buy & hold investment.
Purchase price: $75,000
Cash invested: $15,000
Mixed-use brick building with a storefront in the Camp Washington business district. Two commercial suites on the ground floor. The second floor has a two bedroom apartment in the front and a one bedroom apartment in the rear. The same can be found on the third floor. The fourth floor is unoccupied, but in the past it had an apartment.
The neighborhood zoning has been recently changed to the new designation of UM - Urban Mix, which was used in OTR.
What made you interested in investing in this type of deal?
Geographically close to downtown and the University of Cincinnati. The storefront had value for owner-occupancy of my other business. Cash-flow from existing tenants. Rents were well below market rates.
How did you find this deal and how did you negotiate it?
It was listed, delisted, relisted, delisted, and then they were asking $80k and offering seller-financing. Renegotiated after an inspection.
How did you finance this deal?
Attempted to negotiate seller financing. That fell through. Went to a local bank and got a conventional 30 year loan even though it was a commercial loan. My other business, which is renting the storefront, signed as guarantor. It was that business' revenue that secured the loan.
How did you add value to the deal?
I am still working through the deferred maintenance. Some investors would consider it a full gut rehab. It would be easier to do that. I have completed renovation on one apartment, a 1-br, new flooring, kitchen, bath, fixtures. It went from $200/month to $550. Currently renovating the other 1-br. The two 2-br units are mostly untouched and still below market. Installed a mini-split for one unit.
What was the outcome?
Ongoing project building with more value potential from renovations. Very excited about the direction of the neighborhood.
Lessons learned? Challenges?
The amount of deferred maintenance would eliminate it from most of my searches, but its location in the business district and usefulness for operating my other business out of the storefront trumped that. Future investments however will be nowhere near this level of attention.
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