First Purchase 4 Unit House

[Mark Scheffler]

Investment Info:

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

Purchase price: $650,000
Cash invested: $40,000

4 unit multi family house. Main house is two stories with 3 units, fourth unit is detached separate structure.

1/1, 2/1, 1/1, 1/1

House has received historic designation and is eligible for mills act.

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

House hacking, cash flow

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

On Zillow, brought it to my realtor

How did you finance this deal?

VA loan

How did you add value to the deal?

Previous owner was paying all tenant utilities, which was $500-$700/month.
When leases expired for inherited tenants I instituted RUBS to have them pay their own utilities.
Renovated the unit I was living in and after meeting one year occupancy moved out and rented for a significant increase in rental value.

What was the outcome?

After I handed off utilities to tenants, completed renovations and moved out property went from -$500/month to +$1500/month

Lessons learned? Challenges?

Inheriting long term tenants was great in the beginning, but created a big problem when one of them eventually moved out. Having been there for about 10 years, they had really done some damage to the unit and left me with a massive repair/Reno cost.

Lesson learned: wish I had done a closer examination of the units during the purchase process and had done better documentation of the unit condition. With all of their personal belongings covering things up, I didn’t notice a lot of the damage