All Forum Posts by: Adam Feick

Investment Info:

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

Purchase price: $101,750
Cash invested: $31,000

Type: TriPlex
Units: 2 (2BR/1BA), 1 (1BR/1BA)
Current Rent Roll: $1400
Projected Rent Roll: $1500~$1600

Currently fully rented at $1400/mo. 1 long term tenant (7yrs), 2 other tenants are in 1st year lease.
- The 2BRs are at low end of market rent, however they are some of the nicer units that I have found. Rents can be raised $50~100 ea.
- The 1BR is at the high end of market rent at $450/mo.
Monthly cash flow should be $325~350 currently and $400~$425 with rent adjustments.

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

I have been looking at small multi-family properties for buy and hold strategy.
This is a well maintained, fully tenanted at below market rents, which gave it plenty of upside.

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

Found on the MLS.
Asking Price: $110,000
After initial walk through and estimating needed repairs made an initial offer of $103,000 which seller accepted.
Home inspector found some additional items for repair and we negotiated down to $101,750.

How did you finance this deal?

30% down payment with own money.
70% bank financed at 5.375%.

How did you add value to the deal?

Make needed repairs.
Raising rents up to market on the 2BR units.

What was the outcome?

Purchased and closed.

Lessons learned? Challenges?

This was my first investment property so I learned all the newbie items and had to work through the emotions of trying something new.
The seller accepted my first offer, so I should have been more aggressive in making a lower offer.
Talk to everyone you meet and ask for help. The sellers realtor provided a list of property management companies and was extremely helpful. I was able to generate a few leads from the property managers she suggested.

Investment Info:

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

Purchase price: $101,750
Cash invested: $31,000

Type: TriPlex - Wilmington, OH
Units: 2 (2BR/1BA), 1 (1BR/1BA)
Asking Price: $110,000
Purchase Price: $102,000
Current Appraisal: $120,000
Rehab Estimate: $10,000
Current Rent Roll: $1400
Projected Rent Roll: $1500~$1600
Cash to Close: $30,000 (30% down) + $10,000 for Rehab

Found this on the MLS. Well taken care of property that needs some work. Roof is near end of life and other general maintenance items need completed.
Currently fully rented at $1400/mo. 1 long term tenant (7yrs), 2 other tenants are in 1st year lease.
- The 2BRs are at low end of market rent, however they are some of the nicer units that I have found. Rents can be raised $50~100 ea.
- The 1BR is at the high end of market rent at $450/mo.
Monthly cash flow should be $325~350 currently and $400~$425 with rent adjustments.
Plan to make the required repairs in 2019 and slowly raise rents on the 2BRs up to market level. This is a long term buy and hold.

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

I have been looking at small multi-family properties for buy and hold strategy.
This is a well maintained, fully tenanted at below market rents, which gave it plenty of upside.

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

Found on the MLS.
Asking Price: $110,000
After initial walk through and estimating needed repairs made an initial offer of $103,000 which seller accepted.
Home inspector found some additional items for repair and we negotiated down to $101,750.

How did you finance this deal?

30% down payment with own money.
70% bank financed at 5.375%.

How did you add value to the deal?

Make needed repairs.
Raising rents up to market on the 2BR units.

What was the outcome?

Purchased and closed.

Lessons learned? Challenges?

This was my first investment property so I learned all the newbie items and had to work through the emotions of trying something new.
The seller accepted my first offer, so I should have been more aggressive in making a lower offer.
Talk to everyone you meet and ask for help. The sellers realtor provided a list of property management companies and was extremely helpful. I was able to generate a few leads from the property managers she suggested.

Congratulations on your first property. 

You could consider BRRRRing.  Depending on the current value you could get all your investment back out for the next deal or build your savings back up. 

Good luck on the next one. 

@Autumn Rankin,  @Anthony McEvoy

Thanks for your comments.  I can see from current Google Streetview that additional mobile homes were in the park.  That being said the current City Zoning for the land is medium density residential, meaning no new mobile homes can be added, only the existing homes can be maintained.  The Zoning Department said they get calls about the property all the time, however it is still for sale +1.5 years.

The lots can be redeveloped with single family or multifamily homes.  Currently you can buy duplexes from the 80/90s for about $75k, so redevelopment seems out of the question for now.  It would be much more expensive to build than purchase currently for sale units.  

Any other thoughts or anyone with experience with redevelopment experience want to estimate the cost to build multifamilies?  Current 2 bed 1 bath duplexes rent for around $600/side.  

Let me start by saying I have not visited the property yet, I'll be doing that in the next week or so.

Here are the property details.  

LOCATION

Midwestern city of 140,000, within a mile of a military base and university (17,000 enrolled).  

INCOME

2 stick built homes - currently rented ( total monthly rent $1,170)

2 tenant owned mobile homes @ lot rent $275 each ( monthly $550)

3 park owned homes, vacant and haven't been rented for 2 years.  Broker says need work, I'll assume the worst - that they need completely rebuilt or replaced.  These were being rented for $500~550 each.

14 empty pads.  From google maps pictures (2015) there were 5 additional homes that have been moved or torn down.

EXPENSES

Stick built homes pay for all utilities.

Park owner pays for water/sewer of mobile homes.

Property taxes $2,000 yearly (166.67/mo.)

Water/sewer, Trash, landscape, snow removal, etc monthly average $350

There are additional misc expenses roughly $40/mo.

Asking price $65k (15 yr mortgage about $400/mo.)

Insurance unsure yet.  

As it sits now I think it cash flows $250ish/mo after considering vacancy and capex.  Not good.  

However pending the condition of park owned mobile homes and existing pads/utilities I think this has a lot of upside due to location and a growing city.  I have personal finances in place to upgrade the park owned homes or replace them and would plan on adding a few new homes in the next year.

Sorry for the long post.  Would really like to hear your thoughts and opinions.  What am I missing or should I be wary of.

Thanks.

I suggest Brookridge Development.  The owner is Chris Davis.  They have done multiple projects for us over the years and built a 2 car garage in our neighborhood last summer.  

All our experiences have been positive.  Timely communication and we have always been happy with the end result.

@Kelli Boone , let us know who you choose and why.

Good luck!