5 family Gardner - way over budget!

[Jonathan Bombaci]

Investment Info:

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

Purchase price: $165,000
Cash invested: $100,000

We purchased this 5 unit through a wholesaler. The property was under construction however was done without permits and got shut down by the city. Our original construction budget was $250,000 but we put in about $350,000. The drivers of that excess were we needed to add a 10 car parking lot, completely rebuild the back fire escape, and do way more electrical and plumbing than expected. We refinanced it at $600,000 and we think it’ll be a great property.

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

It was a great price in a decent location

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

This was brought to us through a wholesaer

How did you finance this deal?

We used hard money to buy it and do the renovation then refinanced it to a local credit union

How did you add value to the deal?

Updated all 5 of the apartments and made it habitable again. The city had taken the certificate of occupancy so we had to bring it up to code across the board.

What was the outcome?

Learned quite a bit about construction costs during a time where things were very unpredictable and in the end turned out okay. This was cheap tuition cost.

Lessons learned? Challenges?

Learned quite a bit about dealing with contractors, sub contractors, and the city.

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

The end result of this one was we started our own development company so we can have better line of sight into what is going on.