6 unit Apartment Building in Houston's Northside Neigborhood

[Jeff Groudan]

Investment Info:

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

We built this 6-unit apartment building from the ground up. We bought the lot, had an architect design the building and contracted for the construction.

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

We like to invest for both cash-flow and appreciation.

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

We looked for a value lot with enough square feet to build a multifamily in our desired neighborhood.

How did you finance this deal?

Commercial Loan

How did you add value to the deal?

We optimized the design for cash-flow and what we necessary in the particular neighborhood

What was the outcome?

We have close to 100% occupancy every year. Property has appreciated over $250K in 3yrs. Consistently cash-flows about $2000 per month.

Lessons learned? Challenges?

Our only challenge right now is maintaining cash-flow while managing increases in:
- Interest rates
- Property taxes
- Insurance rates

[Jeff Groudan]

Quote from @Carlos A.:

Quote from @Jeff Groudan:

Investment Info:

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

We built this 6-unit apartment building from the ground up. We bought the lot, had an architect design the building and contracted for the construction.

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

We like to invest for both cash-flow and appreciation.

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

We looked for a value lot with enough square feet to build a multifamily in our desired neighborhood.

How did you finance this deal?

Commercial Loan

How did you add value to the deal?

We optimized the design for cash-flow and what we necessary in the particular neighborhood

What was the outcome?

We have close to 100% occupancy every year. Property has appreciated over $250K in 3yrs. Consistently cash-flows about $2000 per month.

Lessons learned? Challenges?

Our only challenge right now is maintaining cash-flow while managing increases in:
- Interest rates
- Property taxes
- Insurance rates

Wow! Congrats on the build and the success!

May I ask, when you talk about optimizing the design for cash flow, what are you focusing on? Are there design specifics that you have noticed can help create more income?

 Hi Carlos, because we built it from the grounds up, we were able to design specifically to the market and the lot.   Things like:

-  What were the most units we could get on that lot

-  What size and configuration of the units would get us the most income.   The building was in a neighborhood with a lot of old 2 bed/1 bath bungalow rentals.   So we configured the apartment with 2/1s with finishes and rents that allowed us to compete really well with the bungalows (less than the bungalows but still a really good rent for us.

- We designed the units for low maintenance (tile floors, only electric - no gas fixtures)

- We had 9 parking spots for 6 units so we rented out the 2nd spots.   

- We had a utility room in each unit so we could rent washer/dryers for extra income

All of this is in contrast to buying a building and remodeling it.  While you can customize certain things you are more limited with your degrees of freedom to change an older property.