First Extended Stay Purchase
Investment Info:
Other buy & hold investment.
Purchase price: $2,100,000
Cash invested: $1
Property had a 38% vacancy with an owner that refused to put money back in the property. Property was advertised for 3.1 million. The seller owed 1.98 million. I offer 2.1 million with the condition of assuming the loan in place.
He accepted the offer and we took a private money loan of 175k to pay the difference to the seller and 55k to fix up the vacant rooms and make them rentable. Property is cash flowing 8k/month with 30 vacancies. Property will be refinanced in the summer of 2020.
What made you interested in investing in this type of deal?
The high rents per square foot and demand in the market.
How did you find this deal and how did you negotiate it?
The deal was recently taken off the market. It was listed at 3.1 but I was told the seller needed to sell it.
How did you finance this deal?
We assumed the mortgage in place.
How did you add value to the deal?
We updated the down rooms with new furnishings, killed bugs, and laid new flooring.
What was the outcome?
Still increasing occupancy and attracting better clientele.
Lessons learned? Challenges?
We are looking into acquiring our own heat treatment machine to take care of bed bug issues in the future. Also, weekly room checks are not only required but needed to prevent further issues.
