Building multi-family portfolio

[Guy Yoes]

Investment Info:

Small multi-family (2-4 units) buy & hold investment in Branson West.

Purchase price: $110,000
Cash invested: $30,000

This is the 4th of 5 duplexes I'm in the process of buying.

What made you interested in investing in this type of deal?

I wanted to consolidate my SFRs into multi-family properties in a central location

How did you find this deal and how did you negotiate it?

I was looking for duplexes and met a guy who's father had just sold one. He told me the area where the property was located. I got on the county web site and found names of the owners. I contacted a owner who had 8 duplexes on that street. We agreed on which properties I was interested in and a price. I then negotiated a lower price with the contingency that I would close on all 5 within 12 months and he would manage them until the 5th sold. It was a win/win!

How did you finance this deal?

Two duplexes were purchased via 1031Xs and two were thru conventional bank loans. The 5th will be a cash out refi.

How did you add value to the deal?

I did the maintenance and repair work myself. I was able to increase the rents after repairs were made. By having all the properties on the same street, I cut down on time and expenses which increased my profit margin.

What was the outcome?

I have increased the value of the properties by 10-15%.

Lessons learned? Challenges?

Half the work is finding the best deal and running the numbers. The other half is doing as much of the work you can by yourself and knowing when to use a professional.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

I don't use agents. I do the work myself in locating sellers and find quality professionals ( appraisers, inspectors, title companies, etc) that work with me on fees and services. A little effort saves time and money.
example 1: I told my inspector I was buying five duplexes & would contract with him for all five for a 15% reduction in fees. Saved $300.00.
example 2: I found a contractor rehabbing condos. I got 2 yr old appliances cheap. storing them in my garage.
Do it yourself and save!