Long Term Rental Property

[Erin Helle]

Investment Info:

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

Purchase price: $100,000
Cash invested: $20,000

This appraised for $125,000 when I bought it for $100,000 site unseen. The cash flow represents a 42% year one cash on cash ROI! My best investment yet!

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

We only had about $20,000 to put to work so we needed to find something inexpensive.

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

We already own a duplex in Marion, IL and we found this one of the MLS. It was listed for $99,000, we offered $100,000 and it appraised for $125,000!

How did you finance this deal?

Private money loan, 20% down

How did you add value to the deal?

One unit just needed a deep clean, we painted the cabinets in the second, and had to do some plumbing in the third. All three were rented within the first 30 days of purchase.

What was the outcome?

It is rented for $2300 total per month ($800, $800, $700) and our PITI payment is $725, PM is $230/month, and we pay for trash. Tenants pay for everything else, leaving us with over $1200 per month in cash flow. After down payment, closing costs, and repairs, this is a year 1 cash on cash ROI well over 40%.

Lessons learned? Challenges?

Finding inexpensive markets is challenging, but doable!