Three 2bd 2ba duplexes

[Kevin Killoy]

Investment Info:

Large multi-family (5+ units) commercial investment investment.

Three 2bd 2ba duplexes with attached garages. Each unit is roughly 1,000sqft.

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

Well if you go to my profile you will see that I am a building code inspector in the state of Pennsylvania. So I am around construction a lot and understand the exploding costs of new construction. When I heard about this deal coming online from a fellow real estate agent I started diving into the construction cost of what it would take to build 3 duplexes on 7 acres in one of the most desired townships in my county. Once is did that I quickly learned that they were priced below replacement.

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

I found the deal through a fellow real estate agent who mentioned they had some duplexes that were going to be listed. The agent gave me a ballpark range so I started doing some research. They ended up listing the properties for $495,000 and after viewing them put the deal under contract. Once my inspection cam back there were a few minor issues with the property but I used the "all units roofs will soon need replaced" and dropped the price to $475,000.

How did you finance this deal?

I financed the deal through a local bank and investor in the area who furnished the 20% down payment.

How did you add value to the deal?

I took the tax assessment done by the county and had I challenged to lower the annual tax on the property. And because the rents were low compared to other units in the area I was able to raise the rents $100 per unit within 6 months of buying the property. I would like to add that they are still below average on rent.

What was the outcome?

The property was appraised at a .75 cap, my NOI after the first year is $47,772. So right now its a pretty good outcome.

Lessons learned? Challenges?

The deal ran rather smoothly. Biggest challenge was getting all the paperwork inline for the bank. The biggest lesson learned i had was the security deposits. The buyer stated one thing and the tenants state another and there's no paperwork on either end to prove what is what.

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

I used myself as the agent. So bought the property then got my commission.