Long Term Buy & Hold Duplex

[Seth Wilcock]

Investment Info:

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

Purchase price: $139,900
Cash invested: $32,188

Contributors:
Mike Ernest

Long-term buy and hold in an up an area of revitalization in Indy. 2-unit duplex.

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

The cash flow this property generated was one of the best I've seen. Since this was a turnkey property, it was an easy decision to add this one to my portfolio.

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

I found it on the MLS. I received a notification and once I dove into the numbers, it just made sense.

How did you finance this deal?

I funded this with a conventional Fannie/Freddie loan. I put 25% down.

How did you add value to the deal?

The property was tenant occupied at the time of purchase, and we negotiated a slew of repairs with the seller prior to closing. I'll be replacing the roof after closing to lower insurance costs and further improve cash flow. I will likely be replacing the A/C at some point as well.

What was the outcome?

We ended up closing on the property after about 3 months. There were a lot of repairs we asked the seller to fix prior to closing and it took some time to work through all of that.

Lessons learned? Challenges?

A big lesson learned was to be patient and to stick to your guns during negotiations. Never in my wildest dreams did we think the seller would agree to fix the laundry list of repair items we sent over, but they were amenable to do everything and wanted to close. The numbers have to make sense for you as an investor. If they don't work out, don't be afraid to speak up and walk away from the deal if that's what it takes.

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

Yes. I worked with Mike Ernest at Team Endicott as my agent. I've worked with him several times over the years, and he's phenomenal. A great guy that I highly recommend. I also worked with my company Draper & Kramer Mortgage for the loan, and everything went off without a hitch.