MF/Commercial Phase 2 in Transforming area of Billings, MT

[Tiffany Youngren]

Investment Info:

Large multi-family (5+ units) other investment in Billings.

Purchase price: $285,000

7 Residential, 1 Commercial distressed property purchased in May 2021. The vacant Commercial + attached Apartment AND 1 BR House were all remodeled and are now rented for $1800 (live/work) AND $850 (house). The remaining 4 1BR apartments and 1 studio house rent for $695 and $595 respectively. We are working through gutting, remodeling, and furnishing those for $1150/mo extended stay for traveling nurses and other pros. Everything rents quickly and we have a backlog of nurses needing housing.

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

This was our re-entry into full time real estate investing. We saw so much potential in it and were eager for a big project with big impact. We found it!

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

This was an ON MARKET deal. It was our last purchase through another agent - but our agent is now our managing broker.

How did you finance this deal?

We almost purchased this owner-finance but ended up getting hard (yet private) money loans. Fortunately, we have been cash-flowing (sometimes .... almost completely cash flowing) in the meantime!

How did you add value to the deal?

We remodeled it, changed the management (which is still a project in the works). We are also buying more properties on the block!

Purchased for $285,000
All-In Final Costs Phases 1 AND 2: $375,000
TOTAL: $660,000
Est ARV = $1.2 Million @ 5% CAP

What was the outcome?

ARV after Phase 2 (by March/April, 2022) $1,200,000 based on a 5% CAP Rate.

We are currently looking to refinance ($700,000 - 58% of ARV) to cover Phase 2 and a modest profit.

Lessons learned? Challenges?

So many challenges and lessons learned. I could write a book on just this project. If I were to pick just one - evict problem renters. It's not worth the police calls, thefts, violence, and other trouble that is caused by problem tenants while you're trying to fix the place up. We are identifying non-profits to contribute to who help those who are drug-addicted and homeless since we are not equipped to serve them properly through our real estate investing.

Also - be ready for opportunities.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Through this deal, we became eXp agents, which I highly recommend :) We had our own real estate office years ago, but took a break in 2008 until 2021.