4 Unit Advice Needed

[Christopher Dumelle]

Good evening BP,

This is my first rental property I acquired over the summer. I should likely not have bought it, I knew it going in, but wanted to get started. It was all "rented" when I bought it. I failed on receiving appropriate documentation of all leases ect, before purchasing. Well there were none in place and I knew that but went ahead anyways. I planned on and way underestimated the cost of renovating all units in the property. Here is the current situation.

I have a 4 Unit rental property with a garage. It is located at 604 4th Ave in Sterling IL. I bought the property on a Lease option. I paid $74,900 for the property. I put down $3600 so the balance is around $71000. I had underestimated what it was going to cost to rehab this property to rent ready conditions. The property has 1 3BR unit, 1 2BR unit, a 1BR unit, an efficiency and a garage. Right now the 3BR unit is freshly renovated and renting for $725 a month, the 2BR has an PITA inherited tenant in it and needs around 10K-15K in renovations, but is rented for $530. Once renovated and a properly screened tenant is placed, it will rent for $600-$650. I have a contractor working on the efficiency right now, when that is complete it should rent for around $425. The garage is rented for $65 a month

That is a concise background on the property. I would need around $20,000-$25,000 to get the 1BR and 2BR completely renovated and have money in reserves for the property. (I had some money in reserves in the beginning, that quickly went to renovations) This would make the property fully preforming and after all expenses (Mortgage, taxes, insurance, vacancy, maintenance, utilities, property management, repairs) it will cash flow right around $300 per month. http://www.biggerpockets.com/buy_and_hold_results/3021

Right now the property is breaking even as far as its current expenses not having to come out of my pocket.

I have learned much through this process and will be much more prepared next time I make a purchase. I do want and need to get this one going more smoothly before expanding any further though.

Any help on possible solutions to this problem would be greatly appreciated.

Also if there is a more appropriate place for this thread please let me know.

Thanks in advance for all the wisdom,

Chirs Du Melle