Seeking Small Multi-Family under $180K

[Montoya Lashley]

Hello BP,

I'm a new investor currently trying to get that first deal under my belt. However, I've been having trouble finding what I'm looking for on the MLS. Does anyone know how probable it would be to find an updated small multi-family (preferably a 3-unit or 4-unit) that is fully tenanted through yellow letter marketing in Chicago or surrounding suburbs for $180K or less? I've recently considered trying yellow letters but I'm not too sure I'd have much luck there with motivated sellers as it seems a great majority of motivated sellers own distressed properties and the thought of trying a fix and hold on my first deal scares me a bit. How and where did some of you all find your first deals without putting in any rehab or renovation work? I appreciate any feedback.

Thanks!

[Logan Allec]

Not sure how applicable this is to your market, but I can share a bit about the results of the $2,000 I spent marketing to fourplex owners in LA earlier this year.  Not one callback was one of those sellers you dream about, e.g., the guy who just about lost his shirt and needs to liquidate his assets for $0.70 (or even $0.85 for crying out loud) on the dollar or that older widow who’s sick of dealing with tenants but still wants the monthly cash flow and would be open to seller financing. They all just wanted to know how much they could get for their property.

I'm sure distressed multi-family owners are out there when the market's hot, but obviously they will be much farther and fewer between than distressed SFR owners, both because there are so many more SFR owners and because multi-family owners, in general, are more sophisticated real estate-wise than SFR owners, most of whom aren't investors at all.

Maybe I didn't spend enough on marketing or didn't know what I was doing or how to negotiate, but that was just my experience. And at the end of the day, I bought my first investment, a fully-tenanted fourplex purchased with a 3.5%-down FHA loan, off the MLS, and the numbers still penciled out. Have you considered going the FHA route to purchase a multi-family property?