Small multi-family (2-4 units) buy & hold investment in San Antonio.
Purchase price: $349,000
Cash invested: $69,980
I bought this duplex with two leases in place of 1350 each. The day after I closed I found out that the seller "let the tenants out of the leases" the week before closing. at this point it seems that my agent received the information and failed to disclose it to me. the story is not over but we will see what happens.
What made you interested in investing in this type of deal?
I want to get into multi family and the numbers on this property looked really good. Too good apparently.
How did you find this deal and how did you negotiate it?
A real estate agent found it for me.
How did you finance this deal?
Local bank portfolio ARM
How did you add value to the deal?
I have put tenants in place.
What was the outcome?
The property is now leased but at a lower rate that the original leases. They seem to be really good quality tenants but the value of the property was hit pretty hard as a result of the possibly fraudulent leases.
Lessons learned? Challenges?
Go with my gut. I had a feeling that something wasn't right but I ignored it. I asked the right questions but my agent gave me bad information and failed to perform is fiduciary responsibility to me.
Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?
Yes. I would absolutely not recommend him.
Who did you buy the property from so that we know who to stay away from??
@Heath Shepard did you use the TREC form for your purchase? Amending an existing lease without the buyer's written consent after the effective date is expressly prohibited in the current version of the form. That seems like pretty egregious behaviour either way. I hope you keep us posted, if you pursue any legal claims here.
I had looked at that one for some clients when it was listed, and I remember discussing that the rents didn't seem to line up with the market in that area. That was the main reason we didn't pursue that one. I noticed you have your license at this point. If you spend much time on multifamily here, there will be a couple of listing agents that you'll learn you need to be extra careful with.
Hey there Joseph! Thank you so much for the guidance here. Yeah I purchased the property before I had my license and I specifically asked my agent if the rents were in line and he said they were. It wasn't until after I had my license that I was able to do a rental CMA and realized that they definitely were not in line with others in the area. I did use the TREC form so I will be sure to let my people know that tidbit incase it can help. I am in the process of trying to get whole and will keep you all informed when it comes to a close. Thanks again!
@Heath Shepard congrats on your investment!
Did you already tell us who you bought the property from so we can stay away from them? Also, congrats! Not all your investments will be home runs. They way I see it, as long as you have some cash flow and the property is appreciationg your than are doing better than 99% of the people.
@palo Vazquez, Unfortunately the property is not cash flowing because I wasn't able to find tenants willing to pay the rents that were originally in place when I agreed to buy the property. I am hesitant to give nay specifics as we are currently in litigation. Once all this comes to a close I will update everyone on the outcome. I don't want to do anything that might jeopardize the case.
@Dmitriy Fomichenko Thank you!
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