Number 8 - First Quad

[Seth Wilcock]

Investment Info:

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

Purchase price: $238,900
Cash invested: $83,503

Contributors:
Mike Ernest

My first quad, and 8th investment purchase. Long-term buy and hold. Property needed minimal repairs and is located in an up and coming neighborhood that should see some healthy appreciation in the years ahead. Property was part of a package deal purchased with 2 other simultaneous quads. This was 1 of the 3. Property was fully occupied with tenants at the time of purchase.

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

I've been looking for a cash-flow positive quad in Indy for years. This one happened to come on the market and it caught my eye. It's in a good neighborhood and needed minimal repairs.

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

The property popped up in my email one morning. I believe I first saw it on Realtor.com. It was part of a package deal. The sellers had 2 other quads they were selling. We put this one under contract at the same time as the other two.

How did you finance this deal?

Traditional Fannie Mae/Freddie Mac financing. The appraisal came in low on this one, so we had to increase our down payment to bridge the appraisal gap. It worked out because even though the cash to close increased, the loan amount and PI payment decreased, which pretty much kept the same cash-on-cash return while improving monthly cash flow.

How did you add value to the deal?

Not much in value was really added on this. It was turnkey.

What was the outcome?

We closed on this property smoothly and seamlessly with the help of my Realtor and the sellers. Quick and painless transaction. Property is separately metered for utilities. We didn't even submit an inspection objection on this one because it was so clean.

Lessons learned? Challenges?

The sellers were utilizing a 1031 exchange to upgrade to a small commercial apartment building. Our offer was attractive to them because we bought it as part of a package deal, which helped them sell all 3 buildings at the same time so they could complete their 1031 exchange. I also learned that the appraiser didn't know how to value quads. It's tough to buy a duplex in this neighborhood for under $250K, and I just can't imagine the quad is worth $205K in it's current condition.

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

Yes. Mike Ernest with Team Endicott at Keller Williams. He has been an essential power partner for me in Indy, and has helped me scale my portfolio while being a powerful ally. He is a vital member of my core four.