6th Investment property

[Anne Keenan]

Investment Info:

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

Purchase price: $190,000
Cash invested: $45,000

4 unit with out of town landlord being mismanaged by property management company. 2 BR/1Ba units w/ 1 car garages. All utilities separately metered. Stucco siding, Aluminum windows. Built 1992.

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

It was the bottom of the 2007/8 crash for MF. Property had been on the market for a year for $240K. I low balled the offer at $190K and the seller said yes "as is". I took the deal. With rents being only $2000 a month total income it didn't cashflow well so I made an offer in which it would.

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

Realtor showed it to me. I told her what to offer. She did as I asked.

How did you finance this deal?

Conventional 20% down could have been 25% can't really remember.

How did you add value to the deal?

Renovated each unit and shifted all utilities to the tenants including water & sewer. It's on a cul-de-sac so I fixed up the yard, painted the outside and tiled the floors in the units as they became vacant. Painted the insides and upgraded the countertops or recovered them. Everything that can be is Natural Gas and the lights are all LED. Motion detector lights outside make everything safe for tenants coming home and lower my risk. Fire Ext in each unit and garage do the same.

What was the outcome?

Rents are now $1500-$1800 per unit. Long term stable tenants. Low utilities.

Lessons learned? Challenges?

Property management companies do some appalling things to cover up what they don't want to fix. Fix things right and permanently the first time and I won't have to do it again. Find single or two man shops to do work like Elec, Plumb, Paint, flooring. Their overhead is less so they charge less and still do a great job. Develop relationships with these people. Let them know you'll use them over and over- develop loyalty. Pay them immediately.

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

Yes- I went and got my license in AZ after she proved to be not reputable.