Off Market Owner Financed Deal to close out the year

[Holly Brown]

Investment Info:

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

Contributors:
Karl McGarvey

We found this property off market on Galveston Island. The property has two doors, a 3/1 Single Family House, with a 2/1 Apartment that sits over a 2 car garage and extra storage unit. Property was purchased at estimated $40,000 under market value with two long term tenants occupying the property, both with rent under market value.

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

Multiple income sources in a single purchase. This was also offered to us at 10% down owner financing, thus no up front loan fees and a very streamlined closing.

How did you finance this deal?

Owner financing at 10% down

What was the outcome?

Low cash flow upon purchase but this property has significant income potential. One tenant has been offered a new lease at a rate closer to market value, and the second tenant will be vacating the 2/1 apartment which we will then rehab and turn into a medium term rental for traveling workers who come to the island seasonally. The storage unit next to the garage will also get a face lift and be turned into a workshop/studio to provide a third source of income from the property.

Lessons learned? Challenges?

I have never inherited tenants before and after only one month of working directly with them, I don't think I will ever purchase another property with tenants that transfer with the purchase.