Under Market Rents in 7 unit

[Jacob Allweil]

Investment Info:

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

Purchase price: $259,000
Cash invested: $65,000

Found a 7 unit where the leases were very old and most rents hadn't been increased in years. Originally it was pulling in 3100 in gross rents per month but I thought they could be closer to 3800. A year later and some reshuffling and we're now getting 4100 per month in gross rents.

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

Wanted more cashflow because I knew my wife wouldn't be working for awhile.

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

My realtor from a 2018 deal led me to this landlord who hadn't posted the property yet.

How did you finance this deal?

Traditional financing.

How did you add value to the deal?

Reshuffled some of the tenants around to optimize the rents we were getting.

What was the outcome?

It took about a full year to stabilize but we increased the gross rents from 3100 to 4100 per month.

Lessons learned? Challenges?

Before doing something like this, where you'll definitely be reshuffling tenants and having some vacancies, maybe do a more in depth look into the property manager's capacity to take on new units. My property manager, while he said it would be no problem, ended up feeling really cramped for time and I had to pull this 7 unit and give it to a property manager with more capacity.

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

Carrie Dahn in the tri city area has been great to me:)