Closed on a 6 Unit in Worcester MA!

[Andrew Freed]

Investment Info:

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

Purchase price: $750,000
Cash invested: $45,000

Just closed on my 24th unit in Worcester Massachusetts and boy this was a good one! My partners and I acquired this 6 family at $125k a unit. Just to put that into perspective, according to CoStar, units trade for $200k+. The best part, day one rents are above the 1% rule and the building is in great shape! Post stabilization, we are looking at an 8% Cash on Cash (CoC) return.

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

The price per unit was just too juicy to pass up. $125K a unit when things trade for $175-200K, it was a no brainer. It also helped the property was in fantastic shape!

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

Found it off market on a facebook group. I walked it and told the agent it was overpriced. The only issue with the building was the heating units were over 20+ years old but in working condition. I negotiated for the seller to provide 6 new furnances ready to install upon close and provide a 1% agent commission to me. It was a great price at $750K without these conessions so definitely lucked out!

How did you finance this deal?

Small local credit union provided a loan, 5/1 ARM, 6% Interest, 30 year amortization, 20% down, first 6 months interest only. Solid financing in this environment but it took some hussling. I had to pit banks against each other with their term sheets to obtain this deal!

How did you add value to the deal?

It was above the 1% rule day one with the possibility of increasing revenue by $2K once stabalized.

Lessons learned? Challenges?

When you find a great deal, money seems to find you!

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

I was the agent and I recommend the lender, a small local credit union that serves all of New England, Hanscom Federal Credit Union. Great bank to work with!