Adding Investment to Profile: 13 units in Des Moines

[Benjamin Latusek]

Investment Info:

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

Purchase price: $925,000
Cash invested: $200,000

13 Unit Multifamily property in the Waveland neighborhood of Des Moines, Iowa. pre-acquisition: 7% under MR and 15% vacancy/bad debt. Now leased to market, under 4% vacancy/bad debt, and RUBS implementation. Updates of heating, adding cooling, and electrical. This building was built and 1924 and has a lot of old character. We hope to own this building for a long time as we enjoy taking care of it and continuing to make it a staple of the neighborhood.

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

We loved the old charm of the building. I wanted to get started in investing in multifamily real estate in 2022 to take advantage of low interest rates and rising rents. We wanted to improve this building and make for a long-term hold that improves the community.

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

Found on Crexi. Negotiated with a residential agent and purchased from a large capital group in the Des Moines, IA metro.

How did you finance this deal?

Financed by securing debt on a different asset in our portfolio where we could get the best terms given the rising rate environment.

How did you add value to the deal?

Lease to market rent. RUBS Implementation. Reduce Vacancy and Bad Debt. Improve building heating/cooling and electrical systems.

What was the outcome?

We still own this property, but we have: 1) leased to market rent, 2) successfully implemented RUBS to save roughly $3,000/year, 3) Reduced vacancy/bad debt from pre-acquisition T-12 of 15% to less than 4%.

Lessons learned? Challenges?

Pay yourself near market rates for management efforts to avoid burnout. Analyze and submit offer based on if you would have a 3rd party property manager. Always account for the costs of upcoming capital expenditure items in your purchase price. Action will always trump inaction - I have made mistakes, but this deal has taught me a ton, AND we are making money on the deal.