Multifamily purchase in St Louis

[Qulia Brunson]

Investment Info:

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

Purchase price: $55,000
Cash invested: $60,000

My goal was to acquire a multifamily property without ever seeing it. My focus was the numbers, as long as I could make more than 10% return I was satisfied. This property is a 2 unit multifamily in a class C area with low to average rent costs depending on the condition of the properties.

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

Multifamily properties are always more attractive because you are getting two for the price of one. This area has low purchase prices with average rent rates. I was attracted to this deal specifically because of the cash on cash return (20%) and cap rate (21.96%). If I hold this property for 20 years I could see 22.52% return per year and hopefully cash out with some value appreciation.

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

I found this deal online and used a local agent to help with the contract and negotiations. I negotiated it with all contingencies to protect myself and my deposit in case of any undisclosed material facts about the property. We also negotiated $5000 off of the asking price.

How did you finance this deal?

Cash.

How did you add value to the deal?

I suggested the negotiated price, lesser deposit amount and additional contingencies to protect during the due diligence periods

What was the outcome?

I acquired the property and had to invest a small amount of $5000 to get it up to code and move in ready. Currently have two tenants with rent totals $1450 and a $150 property management fee.

Lessons learned? Challenges?

I would start marketing it for rent as soon as its purchased next time. The repairs took about a month then it took another two months to secure tenants. That vacancy period could have been avoided if the marketed started sooner.

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

Yes a local realtor and contractor assisted me with securing this proeprty.