Small multi-family (2-4 units) buy & hold investment in Columbus.
Purchase price: $160,000
Cash invested: $44,500
Type: Duplex (each unit is 2x1.5)
Down Payment: $40,000
Closing Costs: $4,500
Monthly Rent: $1680
Operating Expenses: $915 (includes 20% reserves for Vacancy, Repairs and CapEx)
Cash Flow: $225
Cash on Cash: 6%
Cap Rate: 5.75%
Inherited tenants for both sides, and kept property management company for time being. Will assume control of property management as tenants move out. Leases end in July and December. Solid base hit to get started on the my investment journey
What made you interested in investing in this type of deal?
I have been searching for a small multifamily to invest in. My plan/goal is to househack my way to financial freedom.
How did you find this deal and how did you negotiate it?
My realtor overheard her teammate talking to his seller about a duplex, was able to get all the numbers needed to run the deal. Made an offer and had accepted that night.
How did you finance this deal?
25% down conventional loan. Partner provided down payment, and I covered closing costs
How did you add value to the deal?
Will be doing light rehab to one of the units once the tenant moves. The other unit was updated 2 years ago when seller bought it. Will raise rents with next tenants or lease renewal. Slightly below market rent, especially since water is included.
What was the outcome?
Planning to hold for 5-8 years before selling or refinancing. If selling, will split profits with partner. If refinancing, will 'buyout' partner to become sole owner.
Lessons learned? Challenges?
In a seller's market that is moving as fast as Columbus, it was tougher to negotiate after the property inspection. Owner did not want to make many repairs because he knew there were 2 other offers waiting.
@Brandon Dean this a great breakdown and very helpful. How did you structure your partnership? I’ve considered doing this; my concern is the limited return on smaller deals(2-4 units) having to split the cash flow and not sure on how to actually structure the partnership.
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