1702-1704 3rd St, Cheney WA 99004

[Deepak Malhotra]

Investment Info:

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

Purchase price: $88,300
Cash invested: $88,300
Sale price: $320,000

My very first duplex. My next door neighbor told me that the owner had three duplexes but would only sell if he could sell all of them at the same time. My neighbor was willing to buy two. He wanted to know if I wanted to buy one.

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

My neighbor told me that the numbers worked. He told me that the numbers "penciled." I had no idea how to do the analysis but was happy that someone else had done it so purchased, paying all cash. I later learned that he meant that the price was less than 100x one month's rent. Only later did I decide to use leverage and refinanced with Washington Mutual.

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

My neighbor did that work.

How did you finance this deal?

Cash.

How did you add value to the deal?

Just routine maintenance.

What was the outcome?

Positive cash flow the entire time I owned it and it gave me the desire to buy more.

Lessons learned? Challenges?

I was worried about the slab foundation and flat roof. In the end, neither turned into a problem.