How to Buy a Cash Flowing Quadplex for ~$3,000!

Question

Investment Info:

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

Purchase price: $350,000

Cash invested: $33,191

4 Unit Quadplex in Savannah, GA.  Using my VA entitlement (I'm active duty Air Force), I was able to get into this deal for

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

I was on the hunt for a Quadplex because I knew I could use my VA to purchase up to 4 units.  By combining the 0 down VA with the BRRRR strategy, I was able to get into my first deal for little upfront money!

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

I found this deal on the MLS.  I used an agent to negotiate the terms, however, in retrospect I probably could have talked them down more than just $4,500.  I was able to work in a brand new HVAC for one of the units, however.  So it's not all that bad.

How did you finance this deal?

I used my VA entitlement to finance the deal at 100% LTV!

How did you add value to the deal?

I've rehabbed 3/4 units.  Most of the units needed cosmetic updates including new kitchen/bathroom countertops, new tile floors, fresh paint, and some basic electrical upgrades.  Each unit's rehab averaged ~$12,000.

What was the outcome?

After rehabbing each unit and recycling the "trouble tenants," I was able to double the rents and positively cash flow!

Lessons learned? Challenges?

I learned many lessons with this first deal.

1). Get a second opinion on contract work.  Make sure you get qualified bids from qualified people! 
2). Hire a Property Manager! It's not worth the time or headaches dealing with "trained tenants" who don't want to pay rent.
3). Build a system to control costs! 
4). Save every receipt for your CPA.  Build a system that allows easy tracking and recording for tax time!

Kevin Brenner · Answer

@Karen Kalina I purchased this deal in August of 2018.  Both of my quads are all brick so I didn't have to worry about exterior painting.

What neighborhood is your Quad in? Downtown quads are much more expensive.

Karen Kalina · Answer

@Kevin Brenner when did you purchase this deal? I can't find any quads for that cheap in Savannah right now.

Also do you happen to have a recommendation for exterior painter who will also fix/replace rotted siding?

I also have a quad i just finished rehabbing my costs were much higher and I was hoping for an ARV of closer to 600k, (based on price per sqft market analysis). Would love to compare notes....

Great job and thank you for your service!!

Kevin Brenner · Answer

@Bill Goodland thank you! I am pretty much helpless when it comes to hammer swinging so I did zero work.  I have found my time is more valuable raising private capital and searching for other deals.

My ARV with this project is a conservative $460,000 based on recent comps and a rental market analysis.  I'm currently rent rolling $4900 per month and my PITI runs me $2500 per month.  After variable expenses (vacancy, maintenance, CapEx, and management) I cash flow approx $1200 per month.

And yes I will add pics in the future.  I'm just updating my BP profile now.  I need to add all my deals :)

Charlie Anne · Answer

@Kevin Brenner @Karen Kalina do you have any contractor recommendations for Savannah?

I’m adding a kitchen and renovating a bathroom.

On the exterior I need a new fence & some siding.

Shardae Robinson · Answer

Hey @Kevin Brenner! Congrats on this great deal! I was under the impression that the VA loans were only valid if property was your primary residence. My husband is a veteran and we used the VA loan for our home, but sounds like the VA Entitlement is something different?? Could you send a link or resource with more details, please? I've googled and there seems to be some overlap in the results, so I haven't gotten a clear answer to my question. Thanks in advance!

Aisha Duff · Answer

@Kevin Brenner awesome job! And close to Ardsley Park is a true score. We are active military as well stationed in the area. We have a couple of properties using VA, but would love to learn how you were able raise the private capital?

Kevin Brenner · Answer

@Karen Kalina that's awesome! A friend of mine has a quad in Starland and he rents each room out to SCAD students.  Make's an absolute killing on it! My quads in a more emerging market south of Ardsley Park.

Karen Kalina · Answer

@Kevin Brenner Our quad is in the Victorian district.

Theresa Harris · Answer

@Kevin Brenner  Nicely done!  Especially getting rid of the problem tenants and increasing rents.

Bill Goodland · Answer

First of all, thank you for your service @Kevin Brenner. Second of all, congrats on an awesome job. I know you mentioned getting contractor bids, how much of the work did you do yourself and are you glad that you did it as opposed to hiring it out?

Also curious, what do you think the current value or the place is and what are current rents? I'm sure the community would love to see some before and after pics as well.

How to Buy a Cash Flowing Quadplex for ~$3,000!

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