Large multi-family (5+ units) buy & hold investment in Central Falls.
Purchase price: $560,000
Cash invested: $56,000
2 adjacent lots, a total of 8 residential units with 10 garage units - fully rented upon acquisition with several long standing MTM tenants (one as long as 19 years). C+ class property that was under-managed leaving ample opportunity to add value both in aesthetic improvements and in terms of tenant & lease management. Both residential structures are in relatively good shape with no urgent, major rehab required.
What made you interested in investing in this type of deal?
- Very unique in that we have 10 garage units rented along with the 8 residential units. Made for a complicated insurance and appraisal situation but a great feature to boost the bottom line.
How did you finance this deal?
- We were able to secure this package deal with a first position commercial loan at a +2% benchmark interest rate for 75% LTV. Very competitive from what I found in researching local banks.
- Layered a second position seller financing note for 15% LTV at a 5% interest rate and interest only due year one, co-termed at ten years.
- Resulting in just 10% initial cash outlay.
How did you add value to the deal?
- Gradually bring rents to market rates, some haven't increased in 5+ years.
- Add onsite laundry, building basement storage, reinforcement of rules, and outdoor facade improvement
What was the outcome?
We'll hold onto this one for quite some time.
Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?
Yes. Webster Bank was a pleasure to work with for bank financing.
That's great Andrew. Good job! How many offers did you make before you landed this one? Also, did the seller finance loan affect the bank's financial terms at all? Sometimes the bank doesn't let you take out a second loan.
@Andrew Albert congratulations on your purchase!
Thanks @Jay Chang . We probably made a dozen offers over the course of 6 months before this one was accepted. We also changed geographic focus over that time. The seller financing definitely has an impact - I reached out to at least half a dozen local banks before finding two that were willing to have a 15% 2nd position. Another would have been ok with 10% seller financing. I suppose if you reach out to enough lenders, you'll find one that is willing to work with you.
Thanks @Anthony Thompson ! And thank you for the recommendation with Loiselle Insurance - Nate has been a pleasure to work with.
@Andrew Albert Congratulations my friend I am so happy for the both of you. This is an awesome acquisition and it will be a great long term hold for you guys. good luck with the units my friend. Cheers
Thanks @Martin Ruiz !!
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