10-unit investment purchase in Watertown New York

[Kevin Hunter]

Investment Info:

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

Purchase price: $600,000
Cash invested: $120,000

Contributors:
Michael Ablan

10-unit, multi-family property in an area I already invest. 8 of 10 units have been interior rehabbed. Exterior rehab, siding and windows, is still required. The investment consists of three building, 2x 3-familty units and 1x 4-family unit. 2 units need rehabs when current tenants move out. I was able to work a subject-to deal on the financing which made the price palatable. It wouldn't have worked at current interest rates. This was my first deal using commercial lending as opposed to retail lending. Took a little longer to close than expected which would have also hurt, considering the pace with which interest rates were sky-rocketing at the time. Another reason the subject-to loan was so helpful.

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

I already own investments in that area and have an established team in place.

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

Off market deal that I was approached on by someone I have done deals with in the past. Negotiation was pretty seamless. He offered a price, it worked for me and him both, so I took it. I did have to work subject-to current financing rate with the lender, but once that was settled it all worked out.

How did you finance this deal?

Commercial financing with 20% down.

How did you add value to the deal?

I have rehabbed one of the remaining two units needing work.

What was the outcome?

Property is stabilized but rents need to be increased for a few units.

Lessons learned? Challenges?

I should have negotiated a bit more strenuously on the exterior rehabs. All three properties need siding and new windows. We did settle on splitting the cost of one of the siding jobs, but I should have asked for a bit more. The curb appeal really lacks. Although I wont see a rent bump from the exterior, I will see shorter vacancy times. Once a prospective tenant sees the inside, they are sold. Getting them inside has been challenging due to the lack of curb appeal.

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

Michael Ablan of Marble Key Properties.