All Forum Posts by: Clay Gradis

@Frank Wong

Hi Frank, I agree, every property cash flows when you pay all cash for it :) and a lot less stress when problems occur.

@Jeff Zimmerman

I'm not sure what the area is called, it's at West Shields and Hughes.

@Gina Stern

It sure felt tough at the time, now I've repeated that pain with my 8 plex in Fort Worth that I 1031'd in to.  I thought I knew what I was doing but still had lessons to learn.  The goal is in sight for the Fort Worth property so the pain is almost over.

Hi @Arlan Potter

Rents average at $900 a month

@Oleg Shalumov

True but at this time I'm happy with the situation and will leave it sitting, perhaps in the future.  Thanks for the idea.

Investment Info:

Large multi-family (5+ units) buy & hold investment in Hawaiian Gardens.

Purchase price: $410,000
Cash invested: $100,000
Sale price: $1,450,000

I purchased this property, 2 four plexes, with 2 partners. We held the property for 24 years. This property was so painful to own in the first couple of years that I did not consider investing in real estate again until 2017.

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

I thought buying real estate would be a good investment, turns out it was an incredible investment.

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

A realtor friend of mine asked me if I would like to go in with some partners and buy a small apartment complex. I agreed and we started looking for properties. We found this one and bought it.

How did you finance this deal?

I and another partner went on the title, one for each of the 4 plexes. We took out FHA loans and bought the property.

How did you add value to the deal?

We ran the property for 24 years doing the needful to keep the tenants happy.

What was the outcome?

Over the last 24 years, we have refied the properties several times taking out a couple of hundred thousand each plus at sale we each received a couple of hundred thousand. A great investment. I took my money from this deal and did a 1031 into the 8 plex in Fort Worth were I faced the same pain over again, the lesson not learned, hopefully, I will learn the lesson this time.

Lessons learned? Challenges?

This property was a pain in the behind for the first couple of years, within the first month of ownership every tenant moved out. It is my belief that they were lying about their rent to make the property look better and sell for more and moved out rather than pay the rent we thought they were paying. It took many painful months to get the property rented up, in the meantime, I moved into one unit and paid rent to help cover the mortgage.

Hi Aaron,

I was in the process of getting a loan for the 4 plex that I bought the month after this house.  The process was so long and tedious that we decided to purchase the house outright.  The nice thing about an all-cash purchase is I don't have to worry about the mortgage and if the house goes empty for a while I can still sleep at night.  The bad thing is that I don't stretch my dollars into multiple houses which I could have done if I had taken the loan.

On the negative side, with the house in my Roth IRA, I don't get any of the tax write-offs, this money would have been better invested in a Syndication earning ~15-20% but it is done and I like the house and the $1200 a month rent has been on time for the last 14 months.

I wouldn't do it again (buy property in my Roth or 401k, well, probably not) but am not sorry that I did.

Hi Mike, 75241 is the zip.

I used a professional service, it cost about $1500 but it was nice to get it done and it seems to be done correctly.

Ryan, I am wondering if, during a downturn, you could take your vacation rentals and rent them to full-time tenants until vacationing guests return?  I know the cash flow would be much lower or none but it could get you through the hard times.