My Second Investment

[Tim Mieney]

Investment Info:

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

Purchase price: $150,000
Cash invested: $7,500
Sale price: $190,000

My second investment property. An excellent quad cash-cow, but the building was tired and constantly needed maintenance. The building was fully occupied at purchase, which from a cash flow perspective was great, but each tenant had quirks that made my job a bit more challenging than I had originally hoped. However, they all paid (often times pretty late) so as an early investor it was hard to give up income and force a turnover. During the four years I owned the building I only had to deal with one vacancy, which was pretty incredible. The building seemed to be in a declining area and the quality of tenants in surrounding properties were trending in a less than favorable direction. I decided to sell at the same time I listed the duplex for sale. I did much better on this exit and moved profits into the next deal.

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

The building was all stone and was being offered by a family friend who I had previously bought a property from. It was also double the size of my first deal and I loved the idea of scaling up.

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

Family friend. We discussed a fair price for an off market transaction with no realtors involved.

How did you finance this deal?

Private financing from a family friend. He gave me an incredible opportunity and financed 95% of the purchase. I will forever be grateful for his vote of confidence in me.

How did you add value to the deal?

Honestly, I added very little tangible value to the deal outside of being a more attentive and present landlord.

What was the outcome?

I profited $40K on the exit after 4 years of ownership.

Lessons learned? Challenges?

The importance of systems, obtaining quality tenants and quality service pros to help with maintenance.