Multi-unit STR Project

[Lisa Loesel]

Investment Info:

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

Purchase price: $1,035,000
Cash invested: $300,000

Purchased this newer construction (2007) multi-unit (3) for $1,035,000 in May 2022 with a commercial loan, 25% down. Furnished all 3 units in 6 weeks at a cost of $55,000. Airdna estimated $180,000 per year in gross revenue. First full rental month grossed $22,000.

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

I've been doing STR for close to 10 years. This deal was appealing because I already have STRs in the neighborhood so I know it rents well & new construction in this area is rare.

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

I was familiar with the building & saw it go live on MLS. We submitted an offer within hours of it being listed. One of the units was vacant at the time of listing. I negotiated access to the unit as soon as we paid earnest money, so I had it furnished & rented out for the first weekend after closing. I was also able to store a lot of the furnishings for the other 2 units in that unit, so I had the 2nd unit furnished and ready to rent 2 weeks after closing.

How did you finance this deal?

Commercial loan & 2 business partners

How did you add value to the deal?

Because I've furnished quite a few rentals, I was able to streamline the furnishing & set up process. Getting 6000 sq ft fully furnished in 6 weeks is a quick turnaround. Being an experienced host with 100s of reviews helped these units rent faster on the STR platforms. I posted our Airbnb & VRBO listings with virtually staged photos before we even closed so I was able to book most of our busy season & start earning revenue right after closing.

What was the outcome?

The first month grossed $22,000 at 40% occupancy. I expect to do better next peak season once we have plenty of reviews and our calendar is open in advance.

Lessons learned? Challenges?

A newer building does not mean no issues. I should have had my HVAC & plumbing guys come through right away to check everything.
There are multiple ways to get every deal done. There wasn't a single comp anywhere in the city so in order to get this to appraise out, I had to think outside the box a little.

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

I'm a broker so I wrote my own offer & negotiated directly with the listing agent. Our lender is local & we have a business relationship with them.