1st Multi-Family Deal
Investment Info:
Small multi-family (2-4 units) buy & hold investment.
Purchase price: $193,500
Cash invested: $8,000
Fourplex with an on-site laundry room.
What made you interested in investing in this type of deal?
I previously held two single family homes as buy and hold rentals. After listening to Biggerpockets I realized that multifamily properties created an avenue for a much greater ROI.
How did you find this deal and how did you negotiate it?
I found this deal on the MLS, and submitted an offer shortly after listing. I was able to purchase the property at an 11.1% cap rate.
How did you finance this deal?
I financed the deal through conventional means with Guild Mortgage Company.
How did you add value to the deal?
I have raised rents on 3/4 of the units, brought an old laundry room back to life, and added storage sheds on the property for additional income.
What was the outcome?
I have effectively raised the NOI by $8,000 annually. I plan to refinance or sell the property soon to realize the gains.
Lessons learned? Challenges?
I inherited a vacant unit upon purchase and excitedly accepted the first tenant that applied. Although I required an application and background check, I allowed a previous drug user with multiple convictions occupy the premises because of his subsidized housing backing. The tenant put on a great show in front of me but was a total nuisance towards the other tenants. After one of his friends assaulted another tenant with brass knuckles, I was able to terminate his lease agreement early. :)
Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?
Jenny Santana of Guild Mortgage was my loan officer and I would highly recommend her for small multi-family or other residential properties.
