Buy and Hold Duplex Near Downtown Bryan

[Gregory Schwartz]

Investment Info:

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

Purchase price: $270,000
Cash invested: $100,000

We recently closed a successful investment deal on a duplex that we acquired off-market through a strong relationship with one of the largest investors in our town. What made this opportunity particularly enticing was my prior experience managing this exact duplex for the same investor over a span of three years.

The property itself is a 1950s duplex that underwent significant renovations in 2017. Although it was in good condition, we earmarked some funds for further improvements, including repaving the driveway, installing a new privacy fence, and making select upgrades and repairs inside the units.

One of the standout features of this property is its prime location near the vibrant downtown area of Bryan, with easy access to restaurants and shopping, which added considerable value to our investment thesis.

Initially, our plan was to utilize the duplex for Airbnb rentals. However, given the robust rental market conditions, we decided to pivot towards long-term rentals (LTR). This strategic move paid off handsomely as we were able to command higher rents than initially projected.

Here are the key financial details of the deal:

Purchase Price: $270,000 (jointly with a partner)
Financing: Obtained a commercial bank loan with a 30% down payment, 7% interest rate, and a 20-year amortization period.
Initial Rents: $1050 and $1250
Current Rents: $1400 and pre-leasing for $1500 (making it a 1% rule deal!)
Estimated Market Value: $290,000 to $330,000

One of the most satisfying aspects of this investment is that the duplex is now operating at break-even, and we managed to secure it at a 10% discount below market value, showcasing the value of strong relationships and strategic decision-making in real estate investing.

This deal exemplifies the importance of being adaptable to market conditions and leveraging existing networks to uncover hidden gems in the real estate landscape. It's a testament to the power of experience, relationships, and sound financial strategies in building a successful investment portfolio.

The plan? Hold it for forever, refinance as required to tap into equity and continue to grow our little portfolio.

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

My partner and I invest primarily in small multifamily.

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

I worked for the owner as a property manager for 3 years. As a result, I received early notice he was looking to sell. I made an offer on the spot!

How did you finance this deal?

Commercial bank financing 30% down, 20 year amortization

How did you add value to the deal?

We purchased it below market value and increased the rents from $1000-1200 up to $1400-1500

What was the outcome?

Its a great rental that we will hold onto for years to come!

Lessons learned? Challenges?

Relationships are everything in this game. Also dont be afraid to push rents. In this case, it was better than MTR'ing the property