Luck WI first Rental Property

[Cody Benedict]

Investment Info:

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

Purchase price: $130,000
Cash invested: $7,767
Sale price: $185,000

First non owner occupied property. Purchased off market from an investor that had mutual friends/acquaintances. Seller carried 80% of the 20% down payment. Rents were well below market rent when originally purchased with 2/3 of the inherited tenants and 1 vacant unit. The vacant unit was rehabbed and rented while the 2 inherited tenants are slowly having their rent raised with plans to move out so those units can be rehabbed and rented out for market rates.

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

The fact it was an off market deal that I was able to acquire with little out of pocket costs.

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

I found a local landlord and reached out to ask if he had any properties that he was tired of dealing with. We negotiated a slightly higher price for him to carry the down payment for me.

How did you finance this deal?

Seller financing for the down payment and a commercial loan from a small local bank in the area.

How did you add value to the deal?

I rehabbed the units that were under market rents as the leases expired then rented them out at market rates after the rehab.

What was the outcome?

The outcome worked out great. After rehabbing the units and getting quality tenants in and paying we were cash flowing nicely. I was approached by a buyer and they ended up purchasing the property from me for my asking price.

Lessons learned? Challenges?

The biggest lesson I learned was that although on paper a property like this (small town, relatively low rent/purchase price) looks great, it doesn't move the needle much. This has been said on a handful of podcasts but any time something breaks or needs to be replaced it wipes out a solid amount of cashflow for the next couple months or so.