Rundown Fiveplex Converted to STR's generates $15k per month

[Jacob Mueller]

Investment Info:

Large multi-family (5+ units) commercial investment investment in Colorado Springs.

Purchase price: $775,000
Cash invested: $220,000

Found an on market rundown 5-plex that had been managed by an owner-occupant. At contract, the property generated about $4800/month LTR. There was an (legal) opportunity to convert the property into an STR. Since we didn't have enough funds to do the deal, we financed 100% of the purchased price with a combination of long term debt and a bridge loan. Our capital contributed to the renovation & furnishings. The property nets $120k+ per year with professional property management.

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

We wanted to use our experience as short term rental / Airbnb hosts to maximize or increase the value of the property. Take it to highest and best use.

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

Found it on market and negotiated with the listing agent and seller

How did you finance this deal?

We used a commercial bank and a private bridge loan.

How did you add value to the deal?

We renovated the entire property, bought furnishings, used a professional designer, and our own property management company.

What was the outcome?

CASHFLOW

Lessons learned? Challenges?

Learned it would've been better to do a full gut renovation rather than a patchwork renovation. We are consistently having to repair problems as they come up, specifically with the plumbing. Looking back, we should've re-plumbed and re-electrified the entire property.

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

Yes, our own team! Renjoy Real Estate for the brokerage side and Renjoy Rentals for the property management side. Banks love it when you use professionals so getting the debt was exceptionally easy.

https://www.renjoy.com/short-t...