Updated about 2 years ago on . Most recent reply
Basic Duplex in Old Brooklyn - Cleveland, OH
Investment Info:
Small multi-family (2-4 units) buy & hold investment.
Purchase price: $86,200
Cash invested: $37,500
Sale price: $125,000
Duplex in the Old Brooklyn neighborhood of Cleveland (44109). Partnered with a local investor & Realtor who we connected with through BP. Acquired as a long-term rental, renovated to raise rents, and eventually sold around break-even because the timing made sense.
Learned several lessons about working with and managing contractors from a distance, utilizing local resources, listing/renting headaches and tenant screening.
What made you interested in investing in this type of deal?
This was my first long-distance real estate investment as well as small multifamily deal. Investing in the Cleveland, OH area reduces financial barriers but comes with its own set of challenges. My primary partner and I were looking to scale up (i.e., from single family to multifamily) and this seemed like a solid "base hit" to do so.
How did you find this deal and how did you negotiate it?
Local investor and Realtor connection through BP helped find the deal and acted as agent for the purchase. We agreed on a small equity stake in the deal for local support as well. Offered slightly below list price based on analysis and later negotiated a $3k price reduction based on inspection findings. Other than that, it was a straightforward on-market deal.
How did you finance this deal?
Attempted to fund this with one local (Cleveland) lender who was not very responsive and almost killed the deal. Found another broker connection through our agent/partner who was able to help us close this deal with conventional financing. Nothing fancy; 25% down, 30-year fixed market rate mortgage.
How did you add value to the deal?
By renovating the units and bringing rents up to market rates, we were able to add value in the form of both cashflow and equity.
What was the outcome?
Sold this property in December 2022 when the market was still pretty hot. The timing made sense while my primary investment partner and I were looking to scale up into commercial multifamily (5+ units) and our local partner on the ground was neck-deep in another business venture. Basically broke even when all was said and done but learned a lot.
Lessons learned? Challenges?
Always trust your gut!
- One of the contractors we worked with had done some other work for our agent partner but his communication was lacking as was (we learned later) his attention to detail.
- A tenant we approved in our first renovated unit looked great on paper but our agent partner who also helped manage the property felt like something may have been off with them, though he couldn't put his finger on it. We ended up approving the placement anyway and ended up having a lot of issues.