Buy and Hold Success During Covid-19
Investment Info:
Small multi-family (2-4 units) buy & hold investment in Waupun.
Purchase price: $175,000
Cash invested: $40,250
My wife and I purchased this property at a very good price. The reason we added it to our portfolio is because of the value add opportunities and what we will be able to get in rent when the work is complete. Special Note - Unit was found, analysed, inspected, negotiated, appraised and closed on during the COVID-19 pandemic. Additionally, we put the offer in two days after our first daughter was born.
What made you interested in investing in this type of deal?
We like purchasing long term buy and hold properties and this fit our investing strategy to a tee. Rents will be increased and the overall value of the property will increase within a year of us making simple changes.
How did you find this deal and how did you negotiate it?
Found on Zillow (we usually find deals off market and this was our first on the market) and we were the first investor in to make an offer. We made our initial offer based soely off numbers what was total income coming in vs total expenses going out. After the inspection we were able to close on the property significantly cheaper because we found a few things that we would have to do to the building: windows, AC Units and garage doors.
How did you finance this deal?
Commercial Loan under our personal names. 25% down.
How did you add value to the deal?
New Garage doors, windows, AC Units and we will be upgrading the units as tenants flip.
What was the outcome?
Cash producing asset.
Lessons learned? Challenges?
The seller did not have good communication skills. He worked with a realtor (his niece) and we self represented so it was a lot of back and forth trying to get information from the seller. We learned to have patience through the process and never be afraid to negotiate what we know the deal is worth.
We also didn't get readable leases. Two of the units were his family members. But since none were on a year long lease, we are able to get them all onto our leases.
Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?
N/A