Albuquerque Fourplex BRRRR

[Patrick Torres]

Investment Info:

Smull multifamily / Fourplex

Purchase price: $105,000

Fourplex that had been vacant & boarded up for several years, there was significant water damage due to a roof leak & vandalism.

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

The property was the worst looking on a cul-de-sac of decent looking properties.  The units had combo central air & heating which is not common in this class of rental.  Although the property was in poor condition, the owner had received it in a divorce settlement with no debt on it and several of the units already had new windows & cabinets in the kitchens. 

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

I paid a bird dog that contacted me on Craigslist $500 for the lead. I made contact with the owner and negotiated a price based off the condition of the property & an ARV which turned out to be low due to the strength of the ABQ multifamily market.

How did you finance this deal?

Local non profit lender that specializes in multifamily loans 

How did you add value to the deal?

Nearly a complete cosmetic rehab in all of the units plus a new roof, new electric meter, stucco repair / new paint, new windows, added gas lines for the ranges.  

What was the outcome?

Purchase price $105k, Remodel / Holding Costs / Closing Costs & Loan Fees were approximately $95k, after 6 months we started a cash out refinance on the property at an appraised value of $360k. At 80% LTV we will be getting a check at closing for approximately 120k.

Lessons learned? Challenges?

Reliable contractors that are affordable are an ongoing challenge. We had to work through a title issue on the property with the seller that took about 6 months to resolve before we could close. Out of state retail investors have dramatically driven up the prices of small multifamily properties in Albuquerque, this property a few years ago would have had an ARV in the mid 200's.