16 Unit Purchase and Sale

[Ryan Prichard]

Investment Info:

Small multi-family (2-4 units) commercial investment investment.

Purchase price: $1,350,000
Cash invested: $80,000
Sale price: $1,570,200

We purchased 16 units and sold 14 to hold two cash-free. The mix was one 4-unit, two 3-units, the remaining were a mix of SFH and Duplexes. The seller agreed to an aggressive land contract with a minimal downpayment. We converted the Land Contract to a commercial mortgage via refinancing after having ownership. The cash flow allowed for all the rentals to make their own repairs before resale.

After the sale, we held two Single Family Homes now valued at $360,000 that bring in gross rents $2,790 and tenants pay all their own utilities.

This allowed me to go under contract for a 26 unit 5 building purchase.

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

Wanted to know if I could do it and be creative. I thought we were going to experience large appreciation.

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

MLS and I was the agent.

How did you finance this deal?

Land contract and then a refinance into a commercial blanket mortgage.

How did you add value to the deal?

Appreciation and repairs to units after tenants moved out. We bumped all rents up nearly to market-rate by sale.

What was the outcome?

For what we sold we had a 16% gain. Overall if we kept them we would have seen a near 42% value increase.

Lessons learned? Challenges?

I find I like a larger complex and more tenants vs the residential purchase. I've moved into complexes and portfolios with at least 20 units.

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

I was the agent. And I used a local credit union.