WHAT'S UP EVERYONE!!
Now that my final tenant moves in this weekend thought I'd share a little bit about my latest project. I bought a 4-plex in Hamilton Ontario and I want to give everyone an inside look at what this deal looked like from start to completion.
The highlights will include:
- Winning the deal in competition (w/ a bully offer), and what factors led to the deal we received.
- Acting as the GC on my first Renovation
- Evicting 3 of 4 tenants (How I did it)
- Biggest Challenges of the project & lessons learned
- Just some honestly Hilarious things that happened during the course of the 3 months this took from closing to completion that will be great for the forums.
For now I'll leave you with the final results - but I promise to update this on the weekend.
Is this the deal with the pet pig? Haha - can't wait to read about it. Congrats Jacob!!
The evictions are of most interest to me. Congratulations
Wow!!! Congratulations Jacob!!!
Part 1: Market Conditions
My best deals have generally been the result of a selling agent not doing their job properly. I've never bought off-market, but if you're aggressive enough on MLS there is opportunity.
This was listed in the spring-time (May) when offer competitions with 10+ offers were normal if the deal was right. It was listed at $530K which was extremely cheap for a 4-unit, comparable that were smaller in size than this has previously sold in the 700s.
Issues with the listing:
- Priced too low (this isn't a single family so competition isn't as fierce)
- Listed on the Commercial Board but not residential (weird mistake here as it's a Fourplex)
- Was listed in an Offer Competition on Mother's Day Weekend.
Issues with the House:
- All four tenants we're disgusting (Pets, reptiles, children, brutal smell, etc)
- Three of the Four had lived in this house 10+ years through multiple owners
- Current owner had attempted to evict them and lost in court (learned this chatting with one tenant, who let us walk through his unit after asking nicely 4-5 times...lol)
- Current rents we're very low on every unit.
More to come
Part 2: Winning the Deal
This property came up on a Thursday night on the realtor MLS .
My realtor who's really on the ball knew I'd be interested, despite not really actively looking at the time. It was listed at 530K holding offers until the following Wednesday.
We booked a viewing to see it the Friday morning, we brought up a property inspector for a pre-inspection because it was a deal where you needed to move fast.
Same day - I reached out to my mortgage broker and had him run the numbers for financing to see if any of the two JV partners I work with could qualify. Once I knew one of them could. I brought her the deal, told her already checked the financing - we can refinance one of our other properties for half the down payment & she can put up the rest under certain terms.
She believed in me and was on board (#blessed).
We submitted a bully offer for 580K on the Saturday night before the Sunday viewings. They negotiated back and we couldn't come to an agreement on price.
Sunday comes and we find out they're not doing viewings on Sunday (the busiest showing day....) because it was Mother's day and each unit had a mother living there (mistake lol).
We ended up submitting the same bully offer again, Sunday night, changed some conditions and ending up closing the deal at 580K not allowing it to reach competition.
The place was gross and because it was 4 units with tenants the listing realtor needed to be there for every showing. I have a feeling she didn't like being there & was happy to close the deal early on a place where she didn't feel 100% comfortable showing.
The owner made some money, and you can tell she didn't care so much about the bottom line just based on what she was renting her units out for in general.
Next I'll update on how we evicted 3 of 4 tenants.
Sounds like a fantastic deal!! good job @Jacob Perez
congrats on the deal. Would love to know how you got the tenants out.
Congrats Jacob! Looking forward to the continuation of this story...
My guess is you paid them to leave...
Part 3: Evicting Tenants #1 & #2
Disclaimer: this was more luck than skill.
These tenants in each unit we're both actually related + had lived in the house for 10+ years through 3 owners.
I bought this knowing worst case scenario if I kept the tenants that I could still cash flow a reasonable number, but evicting and small reno could jack up the rents extremely high.
Our goal was to evict 2 of 4 tenants, and deal with the other two over time. Here’s what happened.
We requested a 60 day close on the offer and that the seller serves 2 months eviction notice (even though this may not of held much weight legally because it was a fourplex).
The seller did not like these tenants due to personal issues over the years and was very happy to do this on her way out.
I would drive by the house regularly leading up to the close. Two days before close I decided to drive by before I hit the gym and 3 moving trucks were at the house and an army of people were there helping both units move out.
I had an overwhelming euphoric feeling of success lmao.
The whole scenario with Tenant #3 deserves it's own post. It's hilarious, entertaining and worked out perfectly in the end. That will be next.
Eager to read the rest!
Part 4: Evicting the Pig Lady
Everything with this house was pretty bizarre. On day 1 of possession I went to pick up rent from the 2 remaining tenants. One paid, the other was short…on the $800 rent. A nice seeming young lady with 2 kids, several pets. The lease showed there was a boyfriend living there also but she mentioned she hadn’t seen him in days (great start lol).
This unit was severely under priced. A few days later I was at the house doing something, and the former owner (who lives next door and is great) warned me this tenant had a pet pig. She said she tried to evict her in the past and would provide me with all of the paper work. She then goes into her house and brings me a binder of recorded emails, texts, etc regarding this pig issue.
The whole time I’m honestly laughing / just confused / in disbelief someone has a pet pig in a residential home.
As I’m laughing holding this binder. The tenant walks out of the house holding this massive black gross pig, wrapped in some blanket as if I’m not going to see it & transports it to some van where two ladies take it away….
With so many things on the go I leave this, a couple days later I’m meeting someone to check the boiler & cops are at the house & the boyfriend is being arrested, in handcuffs, etc.
I chat with the tenant after try to get details, she’s giving no info as to what happened. That’s when I decided to challenge her on her life a bit. I mentioned the pig, she has two kids, a bf getting arrested and she can’t pay rent. I told you she really needs to think about creating a safe environment for kids, and this was a complete disaster. She was really offended, but it needed to be said.
Two days later she called me and asked if she could break the lease early and go move back in with her parents. We signed a mutual agreement to release (which she may have been drunk while signing, too funny), and she was gone in two weeks.
great story Jacob, looking for this type of deal right now. minus the pig lol
Good Job on a great deal!
Since you evicted the pig, you're now bringing home the bacon! ;)
I love that you aren't afraid to tackle big problems, and seem to keep a level head when many investors would get super stressed out and want to cut their losses (hence 3 owners in 10 years!). Hope it continues to cash flow beautifully for years to come. :)
Entertaining story Jacob. Congrats and continued success !
Would love to see before and after photos!
I just purchased a two bedroom town house with 6 kids and 2 adults living there.. it cash flows well as it is so I don’t plan on going through the eviction process but I have experienced similar feelings. Your ability to be aggressive is admirable. You also seemed to have a lot of luck on your side!
@Robert Burciul thanks for the comment. No doubt I was really lucky on a lot of aspects of this deal. Countless ups and downs on it but was never too rattled by it.
We should connect in the near future considering we're basically next door. A lot of my clients buy investments out niagara way.
@Jacob Perez it’s evident that you have to be willing to take on the bigger problems to get the bigger rewards.
I would love to connect with you in the future. I’m sure I could learn lots from you. I’m only 21 but currently own and manage three units.
However there’s no breaking the bond I have with my current realtor. 🤷♂️
@Robert Burciul I'm not a realtor - but i'll always accept an intro to a great one !
Create Lasting Wealth Through Real Estate
Join the millions of people achieving financial freedom through the power of real estate investing