3 family Flip - In and out in 80 days

[Jonathan Bombaci]

Investment Info:

Small multi-family (2-4 units) fix & flip investment in Fitchburg.

Purchase price: $187,217
Cash invested: $37,443
Sale price: $332,000

We bought this 3 family as part of of a package of 13 properties totaling 35 units based on a 8% CAP Rate. They did they did 13 separate residential appraisals using comps and that created almost $800,000 of instant equity. Purchased for $2,7100,000 and together they appraised at $3,503,000. We are now in the process of carving off and selling some of the under performing properties from a cashflow perspective, and recapturing the equity to be used in our next deal.

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

We saw great opportunity by buying it based on the income approach of a commercial asset and carving it up and selling them as separate residential properties which are appraised based on the comparative approach

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

We bought a portfolio off of the landlord before, that one was off of MLS. We negotiated this one and locked it up before it went on MLS.

How did you finance this deal?

Commercial financing 80% LTV, 3.5% interest fixed for 5 years and amoratized over 25 years. Typical commercial terms but we got the LTV down to 80% since the appraisal came in so strong.

How did you add value to the deal?

Buy in bulk where only commercial buyers can purchase and carve them up to make them residential properties and "FHA" friendly

What was the outcome?

So far so good. This is the first of the 13 to be sold but we have 3 other ones under contract that should close in Q1 2021 with similar margins

Lessons learned? Challenges?

There are alot of GREAT buyers agents out there... then there are all the rest. This one was tough to work through on the resale side.