Large multi-family (5+ units) buy & hold investment.
Purchase price: $357,000
Cash invested: $286,000
This is an 8 unit BRRRR'nb (BRRRR and rent as a short term rental). It's a full gut rehab and upon stabilization will net cash flow around $35k/year.
What made you interested in investing in this type of deal?
I was searching for distressed motels in good locations for the possibility to convert to residential multifamily. With the struggling hotel industry there are discounted assets so I set out to find a viable conversion project.
How did you find this deal and how did you negotiate it?
I found this deal (interestingly enough) on LoopNet. It was listed under the hospitality tab. The seller wouldn't budge on his price but I negotiated that for him to get his price he would need to carry the note. His price, my terms
How did you finance this deal?
The seller financed the property for 20% down at 4.32% and payments starting in 60 days, with a 2-year balloon. I'm okay with the price because my numbers still worked and I got cheap financing on better terms than a bank would have offered for the property.
How did you add value to the deal?
We are doing a full gut rehab on the property and in the end will basically be a new property with high cash flow because each unit will be rented on Airbnb rather than as a motel.
What was the outcome?
The rehab is still underway. The property should be rented and I'll refinance the initial capital out mid-2021.
Lessons learned? Challenges?
This was the most difficult seller I have ever worked with. He pushed back closing, took things off the property that were supposed to convey with the sale, harrassed my contractors, and even filled up one of our dumpsters during demolition after we had already closed. I learned patience for sure!
How did you determine there will be a demand for a motel Airbnb rooms in PCB?
Your cash invested is without renovation cost?
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