Small multi-family (2-4 units) buy & hold investment.
Purchase price: $77,000
Cash invested: $300
So I picked up a triplex from a wholesaler consisting of two 1/1 and one 2/1. When I purchased the property one 1/1 was filled at $450 per mo. The middle unit, the 2/2 was vacant and the remain 1/1 had a non-paying tenant. I filed the eviction and raised the rents on the 2 units. The 2/2 went from 500 per mo to $650 and the 1/1 went from $450 to $500 per month. The demand in this little town is great for rentals. I have a list of people ready to see the unit I was evicting the people out of. Matter of fact, I had the sheriff serve the eviction, changed the locks and my handyman and I removed all the large furniture then I showed it to the new tenant while we were cleaning it out. She agreed to rent it and start the lease in 4 days when I was done with the turnover.
I used a line of credit (not mine) to purchase this property. Here are my options. 1. Refi in a couple of months and keep long term. 2. Sell this property for $130,000 or so. Not a bad profit for a month's worth of work. I do hate selling properties that are cash machines.
What made you interested in investing in this type of deal?
The numbers on this property are really good. With a $77,000 purchase the monthly $1650 cash flow is great.
How did you find this deal and how did you negotiate it?
I was sent this deal from a wholesaler I know. At first, I shopped this property to some investor clients of mine, but the more I looked into it, the more I fell in love with this deal.
How did you finance this deal?
I called my brother and asked if he had any free (not being used) cash laying around. He said he had a line of credit I could use for as long as I needed. (thanks Bro)
How did you add value to the deal?
I raised the rents and evicted a marginal tenant. Overall the property is a lot more stable now.
What was the outcome?
Not sure what I am going to do. I could use the cash from a sale right now, but I love long-term holds.
Lessons learned? Challenges?
Make the sellers get rid of their problem tenants before you purchase. This property was not properly managed and the tenants had gotten away with playing games for far too long and were not willing to abide by my rules.
Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?
I am a real estate broker and property manager.
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