First Triplex - 40% Gross Rent Increase in 3 Months!

[Patrick McGrath]

Investment Info:

Small multi-family (2-4 units) buy & hold investment in Westminster.

Purchase price: $204,000
Cash invested: $71,000
After refinance : $10,000

Triplex - 2 Bedroom 1 Bath Units + 4 Car Garage.

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

We were looking to expand into MF for the increased cash flow potential and ability to BRRRR the property.

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

Found the deal from a Craigslist ad the Seller with looking to liquidate a Portfolio of properties and this was one of them. Ended up talking with the seller over email over the course of 5 months as it did not sell. Seller agreed to meet me for coffee to see if we could make a deal happen. Discussed REI, Life and why he was divesting his rentals. After the meeting he agreed to sell us the property for $210k, it was listed for $249k at the time. After Inspection we were able to agree on $204,000 + $4,000 towards Closing.

How did you finance this deal?

We financed the deal with 25% down conventional financing. $61k total DP and Closing cost.

How did you add value to the deal?

We added value by Renovating (2) of the 3 units. (1) Unit was Vacant at closing and one of the tenants moved out a month after closing. We Completely renovation the kitchens, fresh coats of paint throughout, stainless steel appliances, new toilets, lighting, Ceiling fans in every room, removing the baseboard heat and adding individual room heaters. I built the Cabinet Doors and re-framed the existing cabinets to give them a more modern feel .Parging the basement walls and applying 2 coats of drylock. We added new garage doors to the 4 car garage, new gravel to the driveway and cleaned up the abandon cars, camper and trash.

What was the outcome?

We were able to increase the property ARV to between $290k-$310k. We were able to renovate and find new tenants for 2 of the 3 units, increasing the rents from (A) $750 , (B) $750 & (C) $650 to (A) $1,200 , (B) $880 and (C) $950. Giving us a total Gross rents of $3030 with PITI of $1250.

Lessons learned? Challenges?

We learned the power of relationships and getting in front of the seller to sell yourself and what you are trying to accomplish. After coffee the seller WANTED to sell us the property and give it new life.

Challenges - Dealing with inherited tenants and balance of raising rents and setting new rules and expectations without coming a crossed as the greedy landlord.