3 plex STR, corporate housing and residential rental

[Joe Fraga]

Investment Info:

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

Purchase price: $450,000
Cash invested: $24,000

Purchased a 3 plex with an FHA loan. Lived in it for a year, purchased a new home and turned the unit I was living in into a STR. The other 2 units are corporate housing and a residential tenant which more than covers the mortgage so the STR cashflow is free and clear.

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

I made a goal to have 5 doors in 10 years. Multi-family made it possible to achieve this goal in less than 2 years.

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

Found on the MLS and negotiated through the sellers agent.

How did you finance this deal?

$24,000 down and an FHA loan.

How did you add value to the deal?

The 3 plex was under valued as the owner was receiving lower than average rent for the area.

What was the outcome?

I purchased the property, moved in and talked to the tenants I inherited about what they liked and did not like about the old owner. I was able to use their feedback to offer them certain things like being able to have a pet in exchange for a new lease which allowed me to raise the rent immediately.

Lessons learned? Challenges?

There was really no challenges. It has been a well oiled machine pumping out cash since almost day one.

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

I represented myself which was another benefit as I was able to put my commission of 2.5% toward the down payment.