Multi-unit investment properties are the way to go...
Investment Info:
Small multi-family (2-4 units) buy & hold investment.
Purchase price: $1,090,000
Cash invested: $218,000
Quadruplex in the historic district of downtown San Luis Obispo. Bonus basement with about 2800 feet of additional living space that will be rehabilitated for use.
What made you interested in investing in this type of deal?
Our SFR home was zoned R-2 and we were looking to maximize the investment potential. Because of COVID, we decided to remodel our bathrooms since we were on lockdown. With the downtime during the year, we also decided to take on landscaping the yard. We had no plans to sell but rather, every intention to maximize the property value by way of adding an ADU. A property came up on the market that was a rare find and we jumped at the opportunity. Thankfully our home had been primed to sell.
How did you find this deal and how did you negotiate it?
I was sitting in bed on a Saturday morning scrolling through Nextdoor and came across the property. I sent the listing to my husband and to my surprise, he wanted to see it. We went to see the home and two days later, I received an email from my husband with a google spreadsheet that detailed the financial scenarios that would make the deal work. I was floored because we had JUST renovated our home and had the intention of building out an income producing unit. We pulled off a miracle.
How did you finance this deal?
We thought we were going to have to secure a hard money loan because of the complexity of the deal. Fortunately, we have an incredible team and were able to get a conventional loan. We put 20% down.
Lessons learned? Challenges?
Surround yourself with a solid team, relationships are everything. We overcame a lot of barriers to get this property and a huge part of overcoming them was because of the deep interpersonal relationships we’ve formed as a team and in the community.
Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?
Absolutely. I worked with a realtor on this transaction and I’m also a licensed agent. I’ve got a team of professionals I would highly recommend. Our insurance agent for example saved the deal from going south because we’re considered to be in a flood zone and the policies were astronomical. She went to bat for us by going to her higher ups and challenging the validity of their claim that we didn’t qualify for the lower cost policies and she saved the day when they agreed.