6 unit multi family in Long Beach

[Joseph P Finkelstein]

Investment Info:

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

Purchase price: $1,195,000
Cash invested: $315,000

A 6 unit 1960's build. All 1 bed 1 bath units. At the time of purchase it was roughly 12.5 x gross rents, however shortly after purchase we had two vacancies and were able to get it to 11.5x gross.

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

I got my real estate license in order to invest in real estate, but quickly learned getting licensed teaches you nothing. By luck I was introduced to my brokerage that specializes in investing education, and figured my biggest competitive advantage was executing on what was being taugh to me.

I also specifically needed to purcase a 5+ unit deal in order to work around my limited income history to qualify for a loan.

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

I found this deal on the MLS and negotiated in with the help of my broker and myself.

How did you finance this deal?

5yr fixed, 3.25% commercial loan. In hindsight, I should have negotiated the interest only option to boost cashflow.

How did you add value to the deal?

By increasing rents the state allowed amount, as well as renovating vacant units and advertising for top of makret rent

What was the outcome?

Immediately we got 2 vacancies and were able to bring 2 units up to market. The other two we were able to bring within market with rental increases.

Lessons learned? Challenges?

As this was my first deal, I made the mistake of oversharing. I verbaly said we were excited by the deal and thought we could do a full price offer. This led to a weak negotiating position.

I've now learned to never verbally state a number and work off of your offers and counter offers.

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

I could not have done this without the help of my brokerage and my broker Cody Charnell. He guided us throught the process. We also used the brokers network of David Guevarra at momenta capital and Borba property management in Long Beach, whom without we could not get the deal done.