16- Plex on 43rd St.

[Andrew Adam]

Investment Info:

Large multi-family (5+ units) buy & hold investment in Sioux Falls.

Purchase price: $875,000
Cash invested: $218,000

I had my Broker find this off market deal that needs some work. I know I can start managing it right, fix deferred maintenance and make sure the rents are in line with the market. At the time of purchase there was no reported laundry income, no garages were being rented out, pets were not allowed, and the rents were not inline with the market. Tenants had to bring a check to a leasing office and had no online rent payment options. I am currently putting in lots of cap ex and turning some units. This should be a really nice cash flow / forced appreciation investment in the next 12 months or so.
The beauty of this is that I have already had tenants excited about the improvements to the property thank me as they are now proud to call the place home. They also signed a renewal for increased rent and told their friends about the place! I am thankful to be able to do this type of thing!

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

The value add opportunities. And the nicer location.

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

Off Market, Broker called the owner and we negotiated a price that would work for both of us and include the brokers fee.

How did you finance this deal?

Since it comprised of four 4- plexes I was able to get 4 different residential loans amortized over 30 years.

How did you add value to the deal?

Pet Rent, Garage Rent, Laundry income, rehab & then bringing rents to market.

What was the outcome?

7 weeks in and have already improved the operations by $800 a month.

Lessons learned? Challenges?

I am not a fan of coin opp servicing companies that let machines stay broke for a long period of time and then take a majority of the income for their poor service.
Turning the property around will take at least 6 months since there is a lot to do. I will have updates!

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

Yes, Mike Orr from Jim Dunham associates for the broker. And Troy Lage from Fairway mortgage for the financing.