Small multi-family (2-4 units) buy & hold investment.
Purchase price: $225,000
Cash invested: $40,000
First real multifamily for our, a duplex. At this point, we really do feel like our tastes are getting eclectic. This property has a lot of challenges to it, with 4 flights of stairs and built on a cliff, the views are really good. We actually have this property up for sale right now, we want to 1031 into a 4 unit property. If you know anyone that wants some good cashflow, let us know!
What made you interested in investing in this type of deal?
We liked the idea of 2 units for the price of one. The cashflow on it seemed like it would be better than the SFH that we had been into. It was.
How did you find this deal and how did you negotiate it?
This one was on the MLS, it was on there a while and the location is difficult. We were able to negotiate the sellers down. We were always patient with our negotiations, reasonable to respond, but willing to wait for a good deal. Many times we'd ping the sellers after a failed negotiation after we saw it was still on the market. This was one of those cases.
How did you finance this deal?
We paid with credit lines for the entire property, after that we used a credit partner to put the mortgage in their name, we got all of our money back and then some and we still owned 90% of the duplex. We are now trying to sell this duplex to 1031 into a 4 plex. We have identified and negotiated with the 4 plex owner for 6 months of time to sell our house. For this, we put 50k in escrow and released it to them.
How did you add value to the deal?
It needed quite a bit of work. We performed that work, got it rented out. Now it rents for almost $3500 for both units.
What was the outcome?
Great property to 1031, take our gains and leverage them up again.
Lessons learned? Challenges?
Keep your money working for you. This property was a great introduction into multifamily and was new to us at the time. We were happy to get it, but also whenever doing something new very cautious. Don't stop trying new things!
Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?
Uptown Properties as Brokers and Property Managers