Updated about 5 years ago on . Most recent reply
First Property Acquired!
Investment Info:
Small multi-family (2-4 units) buy & hold investment in Sioux Falls.
Purchase price: $149,000
Cash invested: $37,250
Duplex in C-Class Neighborhood near downtown, 3 blocks from major hospital, and 8 blocks from a university. Each unit is 2 Bed, 1 Bath, with unfinished but dry and bright basements, in-unit laundry, and a garage stall. Home was built in 1916, has solid bones, foundation, and a new roof, although electrical has multiple generations of knob and tube and shielded wire with some new romex.
Purchase Price: 149k
$37,250 (25%) Down Payment + $3,750 Net Closing Costs
30 Year Fixed 3.875% Loan
Current Rent: $1,350 per month (675 x 2)
Expenses:
PITI: $780
CAPEX: $135
Vacancy: $100
Maintenance:$100
Current Monthly Cashflow: $235
Immediately after close rebuilt rear stairs, replaced kitchen faucet, a fridge, and a water heater (with seller cash from close). Planning to completely remodel both bathrooms next spring. Expect to raise rent to at least $700/mo after bathrooms are remodeled.
What made you interested in investing in this type of deal?
We (wife and I) live in Phoenix, AZ, but the price to rent here is double what it is in Sioux Falls. We are seeking to purchase at least one multifamily property a year in Sioux Falls (or Phoenix if prices drop or a deal is found), for the next 8-10 years, then begin flipping that equity into bigger multifamily/commercial properties.
How did you find this deal and how did you negotiate it?
Had multiple MLS aggregator triggers as well as a local wholesaler in the area. This property was MLS and due to being pre-approved, and familiar with the market was able to get an offer in within 24 hours of listing.
How did you finance this deal?
I work for a large, regional bank, and was able to get a 3.875% for 30, fixed. I shopped around but was getting around the same costs and I'm able to meet my mortgage banker and processor at any time.
How did you add value to the deal?
So far, have cleaned up some safety and maintenance issues including the rear stairs, fridge, and kitchen faucet of one side, and the water heater of the other.
To actually drive value, we will be doing complete renovations of the bathrooms next spring.
What was the outcome?
So far, so good, but expecting there to be bumps and learning experiences as we go.
Lessons learned? Challenges?
We will be managing this from long distance. To do this, we met the tenants in-person up front and provided a 'Welcome Basket' to thank them for their patience through the sales process. They had been hand-delivering checks to the local landlord, but got them set up with TenantCloud . com to automate the process, where they may also submit maintenance requests.
Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?
James Kats is a Sioux Falls Investor and Agent and has been instrumental in this process. We've established a relationship that will be very valuable as we continue on this journey.
