All Forum Posts by: Quentin Mitchell

Investment Info:

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

Purchase price: $25,000
Cash invested: $12,000

This is a smaller multi-family that I purchased with a tenant already in it, I was able to raise the tenant's rent right after I purchased it. I then rehabbed the downstairs unit and am renting it for 800 fully paid by a housing program, also the tenant I inherited had to move (went into a nursing home). Now I will have a section tenant moving upstairs in the new year as soon as her packet is given to her for 700 so my monthly income on the place will be 1500 I was previously;y getting 1400. Also, the property recently appraised for 60,000 in less than 2 years.

It was a probate property so it was in pretty good shape just a little TLC and I upgraded the kitchen in the downstairs unit, redid the upstairs kitchen but not a complete remodeled and remodeled both bathrooms.

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

The price and house when I saw it.

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

I found it on the MLS and it was listed at the price that I paid.

How did you finance this deal?

Cash

How did you add value to the deal?

Complete remodel of bathrooms, complete remodel of 1 kitchen and an upgrade to another kitchen and new windows.

What was the outcome?

I was able to raise the rent on the tenant that was currently living there and was able to get 800 for the downstairs unit totaling 1400, the upstairs tenant had to move he got sick but I have another tenant that will move in the new year for 700 so the home will be making 1500.

Lessons learned? Challenges?

Probate properties can take a long time due to arbitration but if it's the right property it can be worth it.

When you are looking at rental properties what some of the things you look for in the home. ( I am only talking about the property itself and not the location)

Structure? 

Hardwood floors underneath?

Landscaping?

Bedroom count?

Bathroom Count?

Windows?

Roof?

Heating system?

Whatever it is go ahead and tell what you look for go?

Me,  I currently invest in Class C smaller multi-family homes so I look at Window count, The roof, gutters, and soffit, Heating systems, the flooring underneath the carpet, bathrooms, and kitchens. I also look at sockets, switches, and lighting fixtures as well.

I agree with @Travis Biziorek you have to have some clearly defined goals and that will help you narrow down the types of properties you are looking for and the strategies that go with them. Detroit is a great market because it has so many opportunities in each asset class and strategy. Once you have an idea of what you are looking for it will be easier to start because you aren't just looking for just anything. Even if you were to pinpoint a specific area that would help a lot. Good Luck!

I know there are a lot of people who love single-family homes and there are other's who swear by commercial 5 units and up, but I think 2-4 units is another niche noted talked about as much and I think it is a great way to start.

Things I like about it.

You are doubling, tripling, or quadrupling, your income because you are receiving rent from more than one tenant

It's possible but unlikely that all the tenants will move out at the same time, so you will mostly have some income coming in at all times ( you can easily manipulate this by staggering leases).

You can get commercial experience on a small scale without the big risk of a bigger project out of the gate.

You can house hack with somewhat of a homey feeling opposed to being in a big apartment building with a lot of people.

You can fund these deals a little easier than the commercial (cheaper).

Sometimes it's can be easier to find these types of properties because most people go for single-family or Commercial. 

Things I don't like

The value is based on comps and not income being created.

In some markets, a good smaller multi-family can be harder to find.

You have rehab multiple kitchens, multiple bathrooms, multiple living rooms, etc.

Feel free to add anything I may have left out, also even though I like smaller multi-family I think long term commercial should be the goal in order to scale and create wealth and financial freedom.

I agree that appreciation should be gravy on the return.

Is Appreciation riskier than cash flow?

Now we both know that when comes to real estate there are no guarantee's and things vary based on market and individual goals. Also, the risk is different depending on the level of experience, market, and area of expertise which is all things equaled is a riskier move for an investor.

I think appreciation is riskier only because a downturn in a market could be out of your control even if you buy right and rehab right, most of the time you need appreciation to get your numbers and if your value goes down in the middle or right before a project ends then you're screwed whereas cash flow is based on rent and value doesn't matter for that.

I have heard on several podcasts and other resources about people who are able to get lines of credits from banks to help fund their deals. I was just wondering how someone people were able to occur this and if someone had any tips on how to find a resource. I have the experience, to date I have done 6 deals, one was a turn-key but the rest were a value add buy and hold properties.

Great Story!