First Apartment Building (9-unit)

[Matthew Pritchett]

Investment Info:

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

Purchase price: $280,000
Cash invested: $100,000

The property is a converted office / warehouse with 3x 2br and 6x 1br. Purchased with 2 good tenants, 1 unit ready to list, and 7 units to rehab and rent.

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

Since investing in a 4 plex, I've been looking for more MFRs and this hit on all points, with good location, reasonable price, low expenses and ready to go to market at market rates.

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

I know the seller and had told him how lucky he was to acquire it about 8 months prior. He did some updating but was worn out with his 9-5 plus updating his new campground. Since we are familiar, he let me begin the rehab and list units prior to closing. This helped make the property cash flow positive immediately (which is a big deal with high interest rates). It started as a handshake deal and we filled out .pdf files ourselves and went through Grant County Abstract title company to close.

How did you finance this deal?

Bank loan with an investor covering a good portion of the down payment, plus a refi on another rental we own in the county.

How did you add value to the deal?

I ran the entire operation of the deal from underwriting, to purchase agreement, through loan and title, marketing units online, and writing leases. My partner has done a lot of the day to day coordination with the contractor and initial property management with the new tenants (coordinating cleaning and keys on day 1 and follow up first renter issues).

What was the outcome?

Very positive, able to cash flow day 1 and have a good first impression with our first investor!

Lessons learned? Challenges?

There will always be more issues than expected with a rehab - so include that in the budget and return estimates. Keep open communication with the investors so they are confident and develop trust with one another.

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

Larry Howard is a local contractor. Grant County Abstract is a local title company. Both excellent.