Medium Multi Family value add

[Kavin Kuykendall]

Investment Info:

Large multi-family (5+ units) commercial investment investment.

Purchase price: $850,000
Cash invested: $140,000
Sale price: $1,476,500

Source: Cold Call
12 unit multi family
Purchase: $850k
Loan 1
$250k 1st position loan (down payment to seller)
2 yr balloon,12% interest only
Loan 2
$600k 2nd position seller finance
3yr balloon, 0% interest, 30 yr am, 8 month deferred payments

Three 4 unit buildings. Took this over from original owners at severe under market rents. We used private money and seller finance for acquisition, raised rents, renovated one building, and sold each building separately as 4 unit buildings.

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

I believe in the power of mom and pop multi family

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

Cold call direct to seller

How did you finance this deal?

Owner finance and private money

How did you add value to the deal?

Renovations and rent increases

What was the outcome?

Exit at nearly double the initial purchase. Return on capital invested ~375%

Lessons learned? Challenges?

Managing contractors and verifying quality of work/timelines can kill a deal.