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Updated over 5 years ago on . Most recent reply
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68 Unit Case Study- First Multifamily Property
I wanted to share my story...it's stories like this that kept me motivated and I hope it can do the same for those on the sidelines or those getting started.
It's been 7 months and we are about nearly finished with the rehab to our first multifamily complex we picked up in April. For those who didn't read or remember my last post, let me give you a little background. I am a contractor that has worked for other investors rehabbing their apartments. After about 15 years of talking myself out of it, my brother and I finally committed to investing in our own multifamily property. Most of our money was tied up in a vacation home in Nosara, Costa Rica ( we love to surf). We had a blast and my kids loved it too, but there wasn't much financial return besides appreciation...time to sell! We had nearly 900K in equity. Fortunately it sold quickly and we were looking to put it to use. We closed in February '18. Didn't take long before we found out one of our customers was in a squeeze. Three of his properties in Orange, TX flooded during Harvey and he only had insurance on one of them. He sold me that property for 1.1 million. Closed in April '18 , the timing was perfect. But the purchase left us cash strapped. Fortunately, we did have another large project going that helped us out...(rehab of 138 units that flooded in Spring, TX) Every ounce of profit we had was dumped into our property. That got us through all the basic rebuild until we secured a 750K loan to finish. So this is the breakdown.
1.1 purchase price
1 million invested in the rehab.
Proforma rents $51K/ month (65% occupied today and expect to 95-100 by January.)
Stabilized Value $3.5 ?
We ended up putting a great product together for the community. Leasing agent is filling it up nicely. New cabinets/ Granite/ LVT flooring and SS appliances. Changed out the siding and new paint. Some might argue we over spent, but I'm hoping that we will have less turnover and hopefully less maintenance.
So what's next? Don't know. I'm considering going to FL...but can't refinance until March or May. Open to partnering or hear of best strategy from here. Sell or refi?
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Originally posted by @Eddie Delaney:
Thx Nuz! We went up on about 75-110 per unit...but they also had a problem with vacancy before. Sometimes at 70 % We added washer and dryer connections at 1500 per unit and hope to get 30 per month additional and keep tenants longer.
If you are having trouble with vacancy you may try keeping some of units furnished for short term corporate rentals. There's a lot of industry in the area that bring in contractors, consultants, etc. for 6 weeks to 6 months at a time where the company foots the bill.