All Forum Posts by: Daniel Mendez

Investment Info:

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

Purchase price: $180,000
Cash invested: $45,000

6 br / 4 bath duplex (3/2 on each side) purchased with Section 8 renters in place. Long term tenants whose rent is paid by Section 8.

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

tenants are in place already. The home was build relatively recently (1990) so it is all electric and doesn't have a ton to do.

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

It was a 2nd sale by a property owner who had just sold a duplex we had an offer on but lost the deal - outbid by another buyer. When we asked if they had other deals to sell they said they'll be selling the duplex across the street soon so we offered them a bit higher than we had offered on the previous duplex and they took the offer straight away.

How did you finance this deal?

Hard money lending with a private bank. 25% down through LLC

How did you add value to the deal?

Fast closing, cash down payment of 25% ready to go, lending ready to go. Easy closing terms - asked for home warranty provided by seller on this one but that was the only condition.

What was the outcome?

We have owned this property for a year and a half and been able to raise rent 2x.

Lessons learned? Challenges?

Rent always comes on time. Utilities paid by tenants. Inspections are every 2 yrs by section 8. We have been able to raise rent 3-5% each year through section 8 approvals but it is a process we have to keep up with like clockwork! Easy to put mortgage payments on auto pay since the rent is also paid by direct deposit from S8 as well. Downside - maintenance must be kept up with pretty meticulously. Not a lot of room to defer maintenance items.

If you live in the property you can do an FHA loan. Only requires 3.5% down. Many markets where you can get a home for $100k or less so the good news is that no you don't always need $10,000 in the bank to get started. I didn't have anywhere near $10,000 to my name when I got started in 09. Running a $50M portfolio of rentals today.

Hi @Daniel Mendez,

I got some great tips from a recent podcast with investor John Casmon. He recommended a site called datausa.io where you can punch in the city and instantly get fantastic data from population to poverty rates. You can do direct comparisons with another area. The detail is awesome, stats about employees, growth, economy, wages, wage distribution etc. Awesome resource, check it out.

@Daniel Mendez I got a duplex on the MLS for less than half the asking price and then used the BRRRR strategy. They are out there. It's a numbers game. Keep looking and keep making offers!

@Daniel Mendez

Yes I've seen it done both ways. Buy in your name then transfer to LLC. Lenders don't always like that though, since they gave you the money.

If you buy under an LLC it's easier if the LLC is actually a performing business. Meaning the LLC has a business checking account, operating agreement and obviously the EIN number. Might be a little more work to do it this way but there is more protection here. As anyone can look up the transfers of properties on a county auditor site.

Best,

@Daniel Mendez yep...pretty routine stuff...you just want to chose your lender and loan product carefully...make sure you have this lined up before you do the deal. Let me know if you need a local loan originator to talk with that does these.

Best of luck.