All Forum Posts by: Kathryn MacGeraghty

The buy now or buy later is one of those questions that depend on your vision of the future. Is the economy going to get better or worse? Does the Federal Reserve have an inflationary monetary policy? Will borrowing costs go up or down? Will rents go up or down? What if this is 2007 all over again? In the very long run, the fed's inflationary policy will most likely prevail over all other considerations.

I love multi-units. I guess you need to live in it for the FHA loan, but your current rent is a screaming deal! Getting a fixed rate loan is good too, since we never know what future interest rates might be. But with such a low down payment, the investment may be risky. Analyze the cash flow, be generous with repair & maintenance estimates, and make sure you can weather rent fluctuations-emergencies-vacancies for both the long and short run.

Investment Info:

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

Near my home and business, between PA and Sequim.

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

The cash flow and price range

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

I used a Realtor. The 1st 4 plex was during a low period in the market, thus a good deal. The 2nd was a 1031, so I was under pressure and bought the only 4 plex in the area. However, it was still a far better investment than duplexes or single family homes.

How did you finance this deal?

Using a mortgage broker, who found a lender that was ok with more than 4 loans. Always 25% down. 

How did you add value to the deal?

We're renovating at each turn. New flooring, paint. Several new tubs & enclosures. Landscaping. I renovate using accumulated cash flow.

What was the outcome?

With rising rents, they are very satisfactory investments.

Lessons learned? Challenges?

1031 exchange has pros and cons. Better to look for what's common in an area before pulling the trigger.

There are plenty of renters in Port Angeles. Single family, stick built homes run in the $100's. There's a lot of manufactured homes, too. Jobs are mostly low level, except the hospital. The US Coast Guard is influential. There is also tourism.

Port Angeles is 2-3 hour drive from Seattle, so prices have not appreciated as quickly. But they are going up. The rental rate on a house I rented in 2013 at $1000 is now $1200.

There's some Coast Guard presence in Port Angeles. Landlords like them b/c of minimal hassles, once you're actually signed on and approved. There's a long app process for the LL to be able to receive rents. There are far more just regular people, like blue collar, health and services. 

When my mother passed away, I was able to buy my sibs out b/c my share of it was 20%. Sorry for your loss!

I felt Denver was too high last year. I bought a plex in Port Angeles, WA, mainly b/c I moved there and wanted to manage it myself. However alternatives I considered for myself and others were Colorado Springs, CO and Bremerton, WA.

Members of NARPM share vendors, except house cleaners and handymen. The others are infrequent enough that it works.

To me, houses are houses and greenhouses are greenhouses. I do not want the lights, water and mold issues in a single family home. Having a small grow light rack, like I want to have for year around tomatoes, well, I would say don't ask don't tell would be the best course of action.

I would start with a certified letter and cc your local Division of Real Estate. The real estate division may be the cudgel that's needed, rather than employing an attorney. Barring paperwork issues, the money should be delivered on the termination date.