North Long Beach 6 unit

[Joseph P Finkelstein]

Investment Info:

Large multi-family (5+ units) buy & hold investment.

Purchase price: $1,195,000
Cash invested: $315,000

A 6 unit 1960's build. All 1 bed 1 bath units. At the time of purchase it was roughly 12.5 x gross rents, however shortly after purchase we had two vacancies and were able to get it to 11.5x gross.

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

I began working with a brokerage firm that specializes in multi-family, and due to income constraints at the time realized my best shot at purchasing a property with financing was to go 5+

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

On the MLS. My managing broker did the majority of the negotiating.

How did you finance this deal?

We used David Guevara at Momenta Capital and the property qualified for 3.35% 5yr fixed conventional financing.

How did you add value to the deal?

Standard rent increases, and then when 2 units became vacant we fixed them up and rented them for top of market rents.

What was the outcome?

Still in the process of trying to turn the entire building, but we are about 50% done. Estimated GRM on markets is 10x gross

Lessons learned? Challenges?

I started the transaction trying to be my own agent, and as it was my first deal, I made the rookie mistake of mentioning my reasonable purchase price up front and it put us on the back foot negotiating.

Also, at the time of purchase the listing agent misrepresented certain facts, but we were able to correct it in escrow.

In addition, as I've learned more, I probably would have used 3-5 year interest only financing. 

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

My managing broker Cody Charnell was fantastic, and my whole brokerage at Buckingham Investments were great. David Guevara at Momenta capital also got us a fantastic rate and LTV.