Small multi-family (2-4 units) buy & hold investment in Lowell.
Purchase price: $212,000
Cash invested: $12,000
2 family (up/down) property. 3 bed 1 bath each unit.
What made you interested in investing in this type of deal?
After a failed partnership on a SFR, I had to regroup and was determined to make the next move solo. I was looking for a deal that could use a little sweat equity, but still qualify for FHA for the low downpayment, and be worth something when I was done. A shortsale 2 fam that was being used as a SFR seemed to make sense. Landing a "flexible" FHA appraiser was crucial to the deal, but was pure luck.
How did you find this deal and how did you negotiate it?
Found the deal on MLS. I was 3rd in line on the offers and I offered asking price. After the first two buyers fell through, my offer was signed. It was a bit of a surprise to me after 2 months had passed. After kicking the can down the road for about 6 months the "Bank" came back and said they had a better offer of $20k over my offer and were planning to let my offer expire after 4 extensions unless I increased my offer, which my realtor convinced me was still a good deal.
How did you finance this deal?
How did you add value to the deal?
I restored the property back to two true units, rehabbed one unit for rental, had the property deleaded, and brought the property back to competitive market rent.
What was the outcome?
Market was not coming out of the hole at the pace I was hoping so flipping the property was no longer an option. Thankfully, renting while owner occupying was a solid back up plan at the time. Now I am still holding the property, with stable tenants at competive market rate (just shy of market average).
Lessons learned? Challenges?
Shortsales can be painful, but if you can be patient you may still end up with a decent deal. Establish your number and try to avoid the emotion (or it could cost you $20k). Have reserves so you can afford to keep the unit empty until you get the RIGHT tenant at the RIGHT rate. Owner occupying give you some additional leeway with tenant selection. Don't think that you know the market after you close on your first deal.
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