Second investment! In case anyone wants to know

[Patrick Echlin]

Investment Info:

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

Purchase price: $260,000
Cash invested: $48,000

I found this 7-unit on the MLS. It needed (still needs) a bit of work, but 6 of the 7 units are now rented, two weeks into owning it. I'll be replacing floors and cabinets on the 7th unit this summer, and will get that rented.

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

My broker/friend told me about 2 years ago that 5+ unit multifamily was the way to go, and I dug in.

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

This was on the MLS. I offered asking price, but ended up having to lower it from $280k to $260k once I saw the property and that the description was inaccurate.

How did you finance this deal?

I did a 20% down mortgage. Because the seller wanted a short closing timeline, I had to pay that 20%, plus some other costs, to close on the property. However, my lender intends to let me use the equity I have in my first property to get that cash back.

How did you add value to the deal?

When I closed on it, it only had one tenant (on Section 8) who was paying well below market rate. I raised that rent at no additional cost to them, performed minor repairs on 5 of the units and rented them out, and will be rehabbing the 7th unit this summer to get it rented.

What was the outcome?

Of the 7 units, 2 weeks in:
1 is not ready to be lived in
5 are rented out
1 is in the paperwork/inspection stage with the local housing authority to get it rented to a subsidized renter

Lessons learned? Challenges?

No big deal. The existing tenant is crotchety and has a foul mouth, but I told him we were going to talk in a professional tone or he would be looking for a new place. So far, so good.

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

I was the agent on this one. I feel like I did a pretty good job ;-)