All Forum Posts by: Christian Becker

My first property is a 4-plex. Still working on some remodeling. Should cash-flow pretty well. Having a hard time finding other properties to cash-flow and the numbers on this one just made sense to me. More interested in MF than SF for most of the reasons already mentioned. You can look at my profile for the details of my deal. Probably not as great a deal as some people can get, but here locally it was a good one for me. Also my first one, so learning a ton. And within driving distance from where I live.

Investment Info:

Single-family residence buy & hold investment in Island Park.

Purchase price: $250,000

Vacation cabin rental in Island Park, close to Yellowstone National Park. Our second buy-and-hold property. I wanted to get another MF, but my wife said a cabin was next. It's been her dream. My condition was that it had to at least pay for itself. It's dual use. We use it as a family for a few summer weeks and throughout the winter and it's rented the rest of the summer, paying for itself or better.
We're self-managing this one through VRBO and Airbnb.

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

Personal use, but paying for itself. Growing equity by appreciation (market is going crazy) and having other short term renters pay the cabin off for us over the next 10 years. Also did some property improvements to add value.

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

MLS, but still got a great deal. Was listed on a Thursday, went to see it next day and made our offer, added $2K above asking. Still got a smoking good deal on it. Could probably relist immediately and get $50k or more for it now. One of those you can make shine with a few improvements and new furniture to make it pop.

How did you finance this deal?

10% down loan with local credit union, portfolio loan product.

How did you add value to the deal?

Was sold as a 4 bedroom, 3 bath. Added a 5th bedroom in the basement by separating off another room with a wall/door and adding a window. Improved outside landscaping with firepit, etc. Added dishwasher and some other items and other small improvements, making it a short-term vacation rental. Completely replaced old furniture throughout with brand new everything, which was the costliest of the whole project.

What was the outcome?

Renting out well. Now in second season. We're happy because we can use it whenever we want. Is about 1.5 hours from our house, so easy weekend get away for us. Well worth it. I'm glad I listened to my wife. Also has the chance to cash-flow nicely if it books out every summer.

Lessons learned? Challenges?

Didn't realize how expensive to furnish a 5 BR, 3 BA cabin with everything. We replaced even silverware, cups and plates with new. Beds, mattresses, sheets, towels. Did I say everything... it was every item. Threw out everything and started over. Bought everything new. But also gives that impression now and feels brand new.

Investment Info:

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

Purchase price: $124,000
Cash invested: $36,000

4-plex purchased with 2 upper units (3-1 and 1-1) currently rented.
Rents $650, $500 and projected $550 and $500.
Purchase price $124,000: $12,400. Additional $23,600 estimated in repairs. Total Cash: $36,000
1% Rule = 1.49%
Monthly rents: $2,200
Monthly exp:
Taxes $220
Ins $120
Lawn $42 (5 months @$100)
Util $200
Mortg $646
Maint $154 (7%)
Mgr fees $176 (8%)
Vacan $110 (5%)
Cash flow: $532

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

Need to get going. Want to buy and hold multiplex rental units for cash flow and appreciation, but mostly cash-flow. Hoping to add 10 properties in next few years.

Plan: Reinvest all cash-flow to pay off note. Estimate for loan payoff with this strategy: 9.75 years with above numbers, all inflation adjusted 2% per year and annual rent growth and property appreciation 2%.
Cap Rate 9.6%
Cash on Cash 17.74%
GRM 5.59

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

MLS. Went and looked at several places. Got lucky. Found this one. Was advertised as a triplex. Ran the numbers, using 1% rule to start. Looked, saw, offered. Smiling..well almost.

How did you finance this deal?

Local credit union in-house lending program.
10% down with credit union loan (30 year amortized, but 15 year balloon)
(5.38%, 30 year)

How did you add value to the deal?

Two basement units needing updating/remodeling (2-1 and 1-1).
Was originally advertised as a 3-plex because the 4th unit was completely trashed/ripped out and looked terrible.

What was the outcome?

Will see. Numbers look good enough if can get the work done and rented out.

Lessons learned? Challenges?

Originally hired rental management company that from neighboring town (where we live) instead of in town and didn't have contacts or experience in town. Lost 5 months of rent for 3rd basement unit. Also didn't advise well on what was need to remodel. Finally changed to local company that has large experience (600 doors under management in town) and contacts. Found our own handyman to do remodel work which is high quality and affordable. No longer through RM company.