My first REI, 4-doors!

25 Replies

Investment Info:

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

Purchase price: $300,000

4-units. 1 bed/1 bath, each
Experimenting with STR for one unit.

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

Converting from long term rental to short term rental.

Market rents for long term at time of purchase was $650-$700 per unit.

Market forecasts for short term rental was $900-$1,100 per unit.

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

This deal fell out of contract, due to the inspection, with one of my realtor’s other clients. He brought me the pre-negotiated price and existing escrow terms I was able to meet.

How did you finance this deal?

Conventional mortgage utilizing a 401k loan for down payment.

How did you add value to the deal?

Painted a unit for long time renter.
Cosmetic updates to convert one unit to short term rental.

What was the outcome?

TBD

Lessons learned? Challenges?

Read the fine print in the leases! I assumed they all go month to month after the terms, that’s not always the case. For the leases I inherited, they default to an additional year if 30 days notice is not given by either party.

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

Yes! Remington Lyman - Realtor
Chris Wharton at First Ohio Bank for financing

Yes! Donny Thompson and his team at REA Solutions has been great. I'm also working with Marc Rice at Tailwind STR to break into STR space.

Updated about 1 month ago

*ERA Solutions

@Jay Howard  25% down (finance $225k) 30 year fixed, 3.5% after paying 1 point. 

Just closed on another conventional loan. 25% down (finance $152k) 30 year fixed, 2.875% after paying 2 points.

I intend to hold onto both properties for a while so I wasn’t too concerned paying points. 

Originally posted by @Jackson Hartman :

Investment Info:

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

Purchase price: $300,000

4-units. 1 bed/1 bath, each
Experimenting with STR for one unit.

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

Converting from long term rental to short term rental.

Market rents for long term at time of purchase was $650-$700 per unit.

Market forecasts for short term rental was $900-$1,100 per unit.

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

This deal fell out of contract, due to the inspection, with one of my realtor’s other clients. He brought me the pre-negotiated price and existing escrow terms I was able to meet.

How did you finance this deal?

Conventional mortgage utilizing a 401k loan for down payment.

How did you add value to the deal?

Painted a unit for long time renter.
Cosmetic updates to convert one unit to short term rental.

What was the outcome?

TBD

Lessons learned? Challenges?

Read the fine print in the leases! I assumed they all go month to month after the terms, that’s not always the case. For the leases I inherited, they default to an additional year if 30 days notice is not given by either party.

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

Yes! Remington Lyman - Realtor
Chris Wharton at First Ohio Bank for financing

Eastmore is a great area. Congrats on the deal! 

@Jackson Hartman Congrats on getting the ball rolling. What class do you consider these? Any chance on raising rents? Any deferred maintenance? Multi is the way to go, in my opinion. Sounds like you had quite a bit of cash to get started. Keep it up, a best to you.

Originally posted by @Jackson Hartman :

Investment Info:

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

Purchase price: $300,000

4-units. 1 bed/1 bath, each
Experimenting with STR for one unit.

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

Converting from long term rental to short term rental.

Market rents for long term at time of purchase was $650-$700 per unit.

Market forecasts for short term rental was $900-$1,100 per unit.

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

This deal fell out of contract, due to the inspection, with one of my realtor’s other clients. He brought me the pre-negotiated price and existing escrow terms I was able to meet.

How did you finance this deal?

Conventional mortgage utilizing a 401k loan for down payment.

How did you add value to the deal?

Painted a unit for long time renter.
Cosmetic updates to convert one unit to short term rental.

What was the outcome?

TBD

Lessons learned? Challenges?

Read the fine print in the leases! I assumed they all go month to month after the terms, that’s not always the case. For the leases I inherited, they default to an additional year if 30 days notice is not given by either party.

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

Yes! Remington Lyman - Realtor
Chris Wharton at First Ohio Bank for financing

Congratulations on the deal! You cannot go wrong buying multifamily in Columbus, Ohio 

@Jackson Hartman

Congratulations! Awesome you started your journey. I appreciate the post because it gave some insight. I am currently looking for a deal but I live in Los Angeles and deals are hard to come by and rents are way under market.

I am looking to invest out of state as well, but I was hoping my first deal would be something I could manage myself.

Keep going! On your way to Financial Freedom!

@Yenika Mac points are up front costs due at closing. 1 point = 1% of the loan value. They’re common in securing better rates. You can look online or work with your mortgage broker to understand the break even point. The more points you buy, the longer you have to hold the property to break even and start saving money due to the lower rate. If you do not plan to refinance for a while, it may make sense to pay points up front. 

You bought a four unit and not even getting a 1% rule in the Midwest , doesn’t make sense that does not seem very exciting to me at all . are you sure you didn’t overpay ? Typically 3-4 unit buildings offer much better returns than this

@Dennis Wayne I wonder that everyday. As my first deal, I'm not expecting a home run. However, my logic here was a more conservative move with a B grade neighborhood. Also, my long term is to convert to STR. If I hit the numbers forecasted, this will be far beyond the 1% rule with better appreciation than a C class deal. Time will tell.

Originally posted by @Jackson Hartman :

@Dennis Wayne I wonder that everyday. As my first deal, I'm not expecting a home run. However, my logic here was a more conservative move with a B grade neighborhood. Also, my long term is to convert to STR. If I hit the numbers forecasted, this will be far beyond the 1% rule with better appreciation than a C class deal. Time will tell.

Ohio is usually pretty good but Colombus is saturated making most of the deals suck . What is your monthly cashflow  calculated to be ? Have you ran this through the bp calculator yet ? You should be getting 800$ Free and clear Cashflow a month off this building Atleast 

 

@Dennis Wayne yes, if numbers meet 1% rule my next step is to run the numbers using the BP calculator. At the time of purchase, BP calculator show -$80 in cash flow. We've raised rents where we can for now and are vacating a unit to convert to STR. If the STR performs as predicted, long term goal would be to convert more units bringing us above the $800 cash flow you've suggested.

I agree, it feels like the Columbus market is a bit saturated and deals are harder to come by with increased competition. I try and monitor constantly and have been thinking about branching out to other cities.

I'd agree with Dennis Wayne that $80 cash flow is not a great return and is very risky. Yes having a unit as a STR will help to buffer that risk but I would personally want to see good returns with LTR as a fail safe. What if the city regulated against STR?

id like to hear more about this I'm sending you a PM.


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