All Forum Posts by: Satyam Mistry

Investment Info:

Buy & hold duplex in west Omaha.

Purchase price: $238,000
Cash invested: $59,500

This is a duplex in west Omaha on 108th and Fort St. It is on a corner lot and in a convenient location. Each side is 2 bed 1 bath and has potential to add another bedroom and bathroom in the basement. One side was occupied for $950 on a month to month lease and the other side was vacant and had some updates such as paint and carpet. Property had the same owner since it was built in 1974 and was well maintained. 

I found this listing going through multi family properties for sale which come up very rarely on the MLS in Omaha. I thought why have I not seen this property as it said it was listed for 20 days and I check properties on a daily basis. I setup a showing the next morning with my agent and found out the property was listed for sale 20 days prior and then went under contract immediately, but the deal fell through and it became available online again. Instead of creating a new listing for the property the original one was activated and I believe it did not get as many eyes on it the second time around as it was not as visible as a newly listed property.

I walked through the property with my agent and a trusted contact and submitted an offer the same day.

I financed this property with 25% down and got a rate of 3.75% on a fixed 30 year loan. I decided not to do the value add right away as we were in the prime renting summer season so decided to rent the vacant side as is at $1200 and sent a notice to the occupied tenant that their rent would continue at $950 for the following month, but would then go to $995 and continue on a month to month basis. 

This is my first multi family property and has gotten me eager to find more small multi family properties in Omaha!

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

Was in the area that I usually target in west Omaha, knew it was a well maintained property, and was the type of side by side duplex I was looking for. 

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

I saw it while casually searching multi family properties for sale at 2am to see if by chance I had overlooked something. Waived the full inspection as I walked through the property with 2 trusted contacts and created urgency in getting it under contract.

How did you finance this deal?

25% down on a fixed 30 year mortgage at 3.75% interest rate. 

How did you add value to the deal?

Decided not to add the value immediately, but rather rent out during prime season for tenants moving in and make a slight increase in rent on the inherited tenant to keep cash coming in. At some point in the future when it makes sense will add a bedroom and full bathroom in the basement. 

What was the outcome?

Successfully placed a tenant on the vacant unit at $1200/month and got the inherited tenant to $995/month for gross rents of $2195. Am close to the 1% rule that has been a metric I consider along with other factors. I like that some general maintenance items, insurance, and property taxes are not much different on this duplex than a single family home so am benefitting from the multiple unit scale. The numbers make sense and I like the long term potential of the property. 

Lessons learned? Challenges?

This went very smooth overall. This was my first time inheriting a tenant and I felt comfortable as I had heard many stories and lessons on BP about going through this process. I still leaned on BP when drafting a letter to the tenant on the ownership change and increase in rent notice. If you have any duplex leads in Omaha please contact me!

@Owen Dashner Nice job Owen! On these properties are you utilizing a line of credit to secure the property and then holding it with the LOC until selling it? I saw on some of your recent deals that the cash invested is quite low so wondering if this is just the interest that was from holding the property under the LOC. It seems this is a pretty fast process for you and you are not holding the property for long especially if just wholetailing it to another investor.

@Garrett Hepperly Hello Garrett, welcome to the BP community. I am an active REI investor in Omaha and it is a great market to be in. Join the FB group Omaha Real Estate Meetup started by @Collin Schwartz and start reading posts and connecting with those involved, basically the same concept as BP, but local to the Omaha market. Also, just start consuming as much BP content as you can in terms of podcasts, forums, blogs, etc. BP is a like a giant cheat sheet of real estate investing information. The more you learn the less you will feel you know, but after months of consistent learning, networking, and effort it will give you a good comfort baseline. 

Go see as many properties as you can with you wife that are for sale/rent all around town and you will start getting an idea of the market while checking on MLS listings as well. Connect with some investor friendly agents in the area and explain what you are looking for when you are ready. You can talk to 10-20 agents and then shortlist the couple that you feel the most comfortable with. When you are ready to start investing reach out to 10-20 local banks in the area and start getting an idea of what amount you will be pre-approved for and obtain other information that may be relevant for the plan you have with the property such as BRRRR, flip, etc. The more you connect with those involved in REI the faster you will learn and the higher the quality of the content you are consuming will be.

Feel free to save my number in my signature and I may be able to help with any questions. 

Best wishes!

@Daniel Claroni Hello Daniel, a great place to start is by getting referrals from other active investors in the area. I am an active REI investor in the Omaha area so feel free to message me and I may be able to help with what you are looking for. Also, join the local FB Omaha Real Estate Meetup group started by @Collin Schwartz as this group is very active and there are always people looking for referrals for certain jobs they need done. 

Another resource I have used is the Nextdoor site/app as there are constantly people looking for handymen for different types of jobs and many people refer who they used. I have saved around 20 handymen phone numbers so I can try reaching out to ones other people have recommended at any given time. Of course not all will still be active or available, but it never hurts saving the number. I just reach out to them explaining what I need done and many times you can usually get a bid on small jobs through text and sending pictures. Most of the users on Nextdoor will be individual home owners so they would have personally dealt with the people they recommend and would have even more attention to detail in their primary residence. 

Save my number seen in the bottom of my signature and feel free to reach out any time. Best wishes!

@Lisa Mathews Welcome to this great community Lisa! I am a REI in the Omaha area and am not very familiar with Lincoln at the moment, but feel free to reach out and I will help the best I can.

In your experience of managing the 4 plex what are a couple of the biggest challenges you have faced and how did you go about resolving or addressing them?

@Thomas Wang Hello Thomas, this property looks interesting. I am actually planning to go see it in person. Multi family properties in the area have been very hard to come by on the MLS. I can share more thoughts after viewing.

@Owen Dashner Nice work Owen! I had seen this rental listing pop up a few weeks ago and had researched it was acquired by Red Ladder, great to know you got the rental price you were looking for. Rents as well as sale prices have been at an all time high in Omaha! You should post some pictures of the rehab as the place looks amazing with quality finishes and attention to detail. 

1. What LTV % would you say your portfolio is currently at and where would you ideally like it to be on average most of the time? I know this is a number that can vary based on an individuals goals and preference.

2. How long did the rehab on the vacant side take and were there any unexpected surprises? 

3. Do you have a full time crew, use a GC, or subcontract each part of the rehab out?

Multi family has been rare to come by on the MLS! I am continuing to network with agents and investors in the area for opportunities just like this pocket listing you acquired. I am currently under contract for a duplex in west Omaha that will be my first multi family property. I would love the opportunity to walk through it with you and get your thoughts. Thanks for sharing.

Hello, I am interested to know how much consideration is put on how many times a property has changed owners and if it matters much to you if current owners are also using property as a rental? 

This question is more for SFR and 2-4 unit properties (of course these small multi family are rentals, but owner may also be occupying).

I have generally had success with properties that have had the same owner for decades that show good signs of maintenance and care. I generally prefer this over a property that has changed hands many times over say 10 years, but am curious to know how much other investors consider this factor. I have waived inspections on recent properties I have purchased and have just done a walk through with a trusted agent/investor as the market has been so hot that good properties under $200k are usually gone in 24-48 hours. If you want an inspection your price will generally be quite a bit higher than other offers for the sellers to consider. Hence the reason I do place some thought on how many times the property has changed hands and over what period of time. Thank you for your input.

@Joseph Cacciapaglia Hello Joseph, wanted to follow up on your post on this topic. When you mention that the higher returns in these types of properties are usually after year 3 is this due to value add and stabilization of the property that has occurred within these first few years? I am assuming these assets are already in good B class neighborhoods. Also, is there a particular year built range that yourself and your clients generally stay around? Thanks for your input. 

@Anthony Gayden Great work Anthony! Had a few questions below:

1. Was this an on market deal or off market? If off market what are the details on how you found it? 

2. Are you using a PM company on these properties? 

3. Out of the 8 units how many are vacant and is there any rehab being done immediately?

4. What has been the biggest challenge adding this many units all at once or what do you expect this to be?