Portland 2-to-3-family BRRR

Real Estate Deal Analysis & Advice
5yFollow

Portland 2-to-3-family BRRR

Danny Bone
Boston, MA · Member since 2020 · 4 posts · 6 votes

Investment Info:

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

Purchase price: $454,000

My wife and I found this multi-family in Portland that fit all of our criteria, then found David with his extensive experience via BP. He is very knowledgeable about all aspects of rental property sales and ownership, and he is the linch-pin that connected us to other "team members" that we need. Our plan is to convert the third floor into another unit so that we can achieve positive cashflow in this high appreciation area, and then cash-out refinance. I hope to work with David in the future.

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

My wife and I are interested in buy-and-hold in high-appreciation areas. Portland Maine is great, and this home was well priced.

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

I found it on Zillow, and then contacted David for the next steps. Our initial offer of $440,000 was ignored, and we then put in a back-up offer at the real asking price of $475,000. Inspection revealed some major issues, and we lowered our offer to $430,000. Sellers countered at $445,000, and we countered at $440,000. We finally caved to the $445,000 ask.

How did you finance this deal?

Conventional loan, 3.65% 30-year, 25% down.

How did you add value to the deal?

The roof needs replacement and in this area cash flow is very difficult with high prices. We'll add a third unit in the top floor. It helps that my wife is an architect.

What was the outcome?

TBD, but we are optimistic this is a solid long-term hold.

Lessons learned? Challenges?

Properties go fast in Portland, so we know that if it's one we really want in the downtown, we may have to act fast and aggressive. Finding them off-market is a great option, although finding actual deals seems difficult. I also learned that we caved at key moments in the negotiation, but that's because this is the property we really wanted. If we attempt an offer on a property that we aren't so attached to and find more common, I hope that we are stronger in negotiations.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

David Marshall is a fantastic investor's real estate agent. Tim Discatio at Garnsby Brothers sourced the property insurance. Michael Riley at New American Finance is amazing as a lender.

5Reply
12 views

Most Popular Reply

Ray B.
Flipper/Rehabber · Portland Maine · Member since 2020 · 39 posts · 36 votes
5y

My friend actually lived in the second unit. Unless the previous landlord did some major remodeling you have your work cut out for you!

I also believe you will find it hard to get an attic unit approved by the city without a second egress. Additionally if I remember correctly, the attic was a little short for minimum ceiling height requirements.

Good luck! let us know what ends up happening.

2Reply
See this reply in the discussion

7 Replies

Jump to latestLatest
  • Dan WeberBusiness Member
    Realtor · Portland, ME · Member since 2015 · 655 posts · 552 votes
    5y

    @Danny Bone congrats on closing! That's a great location in the city. When will you know from the city if you can convert it to a three-fam? Have you reached out yet?

    2Reply
  • Dmitriy Fomichenko
    Solo 401k Expert · Anaheim Hills, CA · Member since 2012 · 18k+ posts · 6k+ votes
    5y

    Nice! Thanks for sharing Danny!

    1Reply
  • Danny Bone
    OP
    Boston, MA · Member since 2020 · 4 posts · 6 votes
    5y

    @Dan Weber Thanks! We love this neighborhood ourselves and think it's going to continue to grow. (And thanks @Dmitriy Fomichenko too.)

    As for the expansion, we've only done our due diligence by calling the city a couple times, reading the zoning code, and looking at comparable development, but haven't drawn up the final plans for approval. Do you think we might run into any trouble? We want to gut-renovate and update all systems, which will require some larger ticket items like a sprinkler system -- we're hoping to stay within our estimated budget. Our plan is to have them ready to rent end of this year. Would appreciate any advice you have.

    0Reply
  • Stephen Brown
    Real Estate Broker · Huntsville, AL · Member since 2019 · 1k+ posts · 872 votes
    5y

    This will be a great deal. Don't you worry about caving in 5,000 on the asking price! Congrats!

    1Reply
  • Jennifer Williams
    Member since 2021 · 94 posts · 45 votes
    5y

    Congrats @Danny Bone, sounds like a great deal!

    1Reply
  • Ray B.
    Flipper/Rehabber · Portland Maine · Member since 2020 · 39 posts · 36 votes
    5y

    My friend actually lived in the second unit. Unless the previous landlord did some major remodeling you have your work cut out for you!

    I also believe you will find it hard to get an attic unit approved by the city without a second egress. Additionally if I remember correctly, the attic was a little short for minimum ceiling height requirements.

    Good luck! let us know what ends up happening.

    2Reply
  • Danny Bone
    OP
    Boston, MA · Member since 2020 · 4 posts · 6 votes
    5y

    Small world, @Ray B. Thanks for the info, and would appreciate any advice you or your friend have.

    Yes, we have a ton of rehab to do. Regarding the top floor, we have to put in sprinklers since it will be a 3-family; the way I read the code we may be able to get by with one egress given sprinklers. If the city allows it, we may remove the second staircase to add square footage; otherwise we'll extend the second staircase to the top floor. We plan to put on dormers to make the top unit livable (the roof needs replacement anyway).

    1Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free