Large multi-family (5+ units) buy & hold investment.
Purchase price: $150,000
Cash invested: $9,000
My second investment property is a 7 unit in West Terre Haute. The property consists of 2 newly renovated empty units, 3 currently occupied units, and 2 trashed units.
What made you interested in investing in this type of deal?
I was excited about the value play opportunity as well as the challenge of buying a larger multifamily property.
How did you find this deal and how did you negotiate it?
My realtor brought me the property as a pocket deal that had not yet hit the MLS.
They were asking $155K, and I offered ~$140K. We settled on $150, but most importantly, they agreed to complete the renovation of two of the units.
How did you finance this deal?
I refinanced my first property for $30K, found a partner for $100K, and used cash for the final amount.
How did you add value to the deal?
The value play is getting the right tenants in the newly refurbished units, managing the current rents up to market value, and cashflow the rehab to create some forced appreciation through renovating the final two units.
What was the outcome?
We closed on 3/15/2021. I am currently in the process of getting the refurbished units rented. Also I am finalizing estimates on the smaller of the two rehabs.
Lessons learned? Challenges?
This was a fantastic learning experience! It was my first commercial deal so there were some unexpected challenges like not having a sellers disclosure available. Also it felt like there was more due diligence needed on the purchasing side.
A week before the closing the property had a water pipe burst, so that made the closing interesting. We had to go back to the negotiating table to determine if they were going to give a credit or complete the work.
Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?
Andrew Southard with Berkshire Hathaway was my agent. He did a great job with all the details.
Jared Coley with Complete Landlord Solutions is my property manager and will act as my rehab professional.
Amber with Integrity Title handled the challenges of the closing.
Jonathan with First Financial Bank was super helpful with funding options.
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