First Multi Family Deal

[Ginny Shaw]

We are in a contract on a 4plex home which we are buying for cash we obtained from a legacy gift. I've owned property since I was 19 years old, and over the last 8 years I have owned rental homes- being the accidental landlord when we could not sell homes we had lived in. We have finally sold all our properties except for our own home and this will be our first purpose bought rental property. I think we have learned enough not to be totally naïve, but I am quite sure we have a lot left to learn!

It's a very nice 4plex in a small town. It comes with 3 tenants and one vacant unit. The place is really in perfectly adequate condition, but our plan is to go in and take it to the next level... replacing carpets with wood plank tiles, installing glass tile backsplash , staining kitchen cabinets dark and adding satin nickel pulls, adding stainless appliances, a dishwasher, disposal, built in microwave, resurfacing countertops... I hope to keep the renovations around $5 to 6K and to do the same to each apartment as they become vacant.

I am 52 years old and we have a pretty solid income right now, but my retirement fund is horrible... the plan for this home and any future homes is to provide me with a decent retirement income and later to give my youngest daughter who has some special needs a business she can run and keep an income from. My husband is retired military with VA pension so our money is safe until he passes on- hopefully not anytime too soon! So right now we would like to invest in making these properties as good as they can be, then raising the rents to honestly as high as the market will stand. We will then reinvest in additional property when we are in a position to.

Yes, I do know I could have borrowed and used the leverage to buy more properties now, but we just didn't want that level of risk and insecurity at our age and stage. We have lived through months with no tenant in place and having to pay the mortgage and didn't want to have the stress of that now. However we will be prepared to borrow for future properties with this "safe" income in hand.

We have started a multi-member LLC, myself, my husband and my daughter.

Is this a sound plan? Have  I forgotten anything huge?

Ginny Shaw

Bandera, Texas