Investment Info:

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

Purchase price: $449,000
Cash invested: $176,000

7-Plex in Kenai, AK. Mortgage, insurance and taxes total is $2,400/month. During long term rental season average rent is $6,500 and during the short term rental season it is closer to $10,000. Expenses generally range from $1,000/month in the winter to about $1,500 during the summer. It is self-managed and I take care of all of the cleaning and turnover for the short term rentals.

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

I have done smaller multifamily properties in the past with a duplex and fourplex. I had a fourplex under contract when this came available and decided to move onto this. It was about the same price with a much higher ceiling when it came to gross rental income. It also offered a 4 bed 1.5 bath apartment that I was able to owner occupy which was convenient.

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

It popped up on Trulia and I sent it over to the agent that I was using at the time.

How did you finance this deal?

I went through a 1031 exchange from a fourplex that I owned and I used a special loan program but still ended up putting almost 40% down because of the appraised value and what the bank felt comfortable loaning on it. I got into a 25 year mortgage with a 5.5% interest rate.

How did you add value to the deal?

I have remodeled three of the units and was immediately able to raise rents. When I purchased the property only 3 units were occupied with rents totaling $2,450/month. Currently all of the units are occupied and the long term rents from September - May are $6700/month and from June - August they are about $10,000/month.

What was the outcome?

So far, so good. It is producing a steady stream of cash flow each month and is relatively problem free other than occasional maintenance.

Lessons learned? Challenges?

The 1031 really pigeonholed me when it came to the negotiation phase. It didn't leave me with much power because the seller knew that if I backed out of the deal I would lose a significant amount of money to taxes.
This also took place during COVID which led to complications with trying to find a contractor and someone to complete work as they were all extremely busy.