Investment Info:

Small multi-family (2-4 units) buy & hold investment in Chattanooga.

Purchase price: $110,000
Cash invested: $35,000

UNDER CONTRACT - 1st True Blue Investment Property

Tenant occupied duplex with each unit currently renting for $650/mo. Property does need renovations and working through DD on the cost of renovations and realistic market rent for the area once renovations are complete. Plan to refi out of the property between 12-36 months.

What made you interested in investing in this type of deal?

Good experience on a tenant occupied cash flowing property.

How did you find this deal and how did you negotiate it?

Property found on the MLS and was listed at $130,000. Contacted my agent about interest and she reached out the listing agent. Property was recently under contract at $130,000 but sellers backed out after inspection. Property was about to be re-listed at $115,000. I offered $110,000 and the offer was accepted. Seller provided inspection report already completed saving the cost.

How did you finance this deal?

Conventional

How did you add value to the deal?

Planning to add value with attention to foundation issues, roof replacement, and interior renovations when units are vacant.

What was the outcome?

TBD

Lessons learned? Challenges?

Investing from overseas and getting Power Of Attorney done for someone to handle closing of the property
Not being able to be present physically for walkthroughs or inspections - have to trust the team!
Estoppel Certificate - will become a critical component of deals moving forward
Was planning a buy and hold, then a BRRRR, will likely become a hybrid of sorts IF the deal closes

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Agent - Adrienne Green with Keller Williams
Lender - Gabe Whitmer with First Bank
PM- Ashley Cross with Whitewater Property Management
GC - will update
REI Concierge - Coaching, Mentorship, Networking
Active Duty Passive Income - Education and networking

@Wesley Thompson - congrats and congrats!  First that you were able to get the house less than 20k than originally priced.  That is a challenge in most markets and I know Chattanooga has been hot for a while.  

I have lots of questions for you!  

One:  why did you chose Chattanooga?

Two:  Why didn't the findings from the inspection scare you off as it did the others?

Three: How did you become involved in the coffee business? (military, REI and coffee!? Love it

@Wesley Thompson - your coffee company website is great!

@Sam Wilson thanks Sam! 

One: why did you chose Chattanooga? - My wife from East TN and most of her family and a lot of friends are in the area, so we have "some" boots on the ground we can lean of if and when necessary. We love Chattanooga, my wife did her undergrad at UT Chattanooga and we got married at the Chattanooga Choo-Choo. We plan to relocated to the area when I retire. My master plan is to be an ROTC instructors at UTC. I have alot of experience and knowledge and I want to pass that on to the next leaders and help set them up for success! That and tell them all the things only NCOs know about lol....Additionally, if we're there permanently I would consider taking over the PM aspect of our properties. But that's a long game I'm not quite committed to yet. 

Two: Why didn't the findings from the inspection scare you off as it did the others?

That's what I'm working through right now. The property realistically needs about 40-50K in renovations to bring it up to really nice standard, but it might over renovate it at that price. Additionally, I would say realistic ARV would be in the 150k range. So at $130k you're cash flowing, but the quality of the property isn't great and there's not a lot of room to work with to make it worth the effort in renovations. At $110k that's a different story. Still going to require some balance so taking the time to get the most complete and accurate picture on renovation estimates and tenant situation so make sure the deal still works.

Three: How did you become involved in the coffee business? (military, REI and coffee!? Love it

I was introduced into e-commerce around the same time as REI and it's just the niche my wife and I decided to work in. It's competitive, but scalable. So we'll see how it goes. Always looking for ways to marry the businesses together which is why I'm trying to formulate getting it into STRs. Puts great coffee in front of a lot of people relatively quickly to drive potential traffic and organic sales, builds the brand, helps out fellow REI investors and carves out a niche other companies may not be considering. That and when I'm back in the US and attend REIA / meetups I can become the "coffee guy" in a room not about coffee. People always remember the coffee guy, or the beer guy, or the whiskey guy....lol

Congrats Wesley! I invest in Chattanooga and have bought two duplexes this year here...both off market. We moved here from the Memphis area to be more active in our previously "distance investing"! Chatt is great for a lot of different reasons...and two of my sons have gone to UTC. My wife recently became a realtor too, which allows us to push ahead in different ways. Glad to connect sometime if it makes sense for you. Love coffee too...but just as a consumer!!!

@Wesley Thompson -  Thanks for taking the time to share all of that!

My wife is from the middle Tennessee area.  We love it there!  She still has a lot of extended family in Chattanooga; she and her siblings and her mom were all born at Erlanger!  

My brother was an Airforce officer and his last job was ROTC at Purdue.  He too chose that in order to be closer to family.

Think that the coffee business is just a great niche and cool way to brand yourself.  My wife feels the same way about owning a laundromat!

Please report back when your project is completed!  I'd love to hear how the numbers worked out.

Congratulations @Wesley Thompson !