Off market Value add 4 family success!

[Brandon Cormier]

Investment Info:

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

Purchase price: $530,000
Cash invested: $20,000

Hello all! I want to share an experience ive had over the past few months with my newest multifamily purchase, and highlight the importance of being consistent, telling everybody what you do, and what you are looking for even when you dont feel ready. Ive owned a 3 family in Fitchburg MA for 4 years that has done exceptionally well with it, living for free in one unit for a while and constantly upgrading the property over the years. I knew it was time to dive into my next property.

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

This specific deal was a close friend's apartment that he was renting. Over the years every single time I went over his house to hang out we would talk about money, investing and the future we were building. And I would constantly bring up that I would love to buy the property he was living in. (even when I had no money and no way to take it down alone.) Fast forward 2 years his landlord mentioned in passing he might sell the property; I was the first person on his mind.

How did you finance this deal?

This deal, i used my first successful buy and hold property and pulled a HELOC to secure financing and reserves. The old owner unfortunately locked his tenants into $800 leases which scared away some buyers before he listed. So i put in an offer for 10% down conventional loan, $530,000 with 10k back to me for closing costs and it was accepted right away.

How did you add value to the deal?

This property it wasn't kept up with in a while. Trees were overgrown over the driveway, and vines of Virginia creeper took over EVERYTHING. The yard looked like trash, plumbing stack leaks and multiple water heater leaks. Huge hole leaking water into the roof, and more. I took the next 5 months to tackle everything myself spending approximately 17k in supplies and tools + paying a plumber and roofer 4k total to fix those issues. One tenant moved out giving me the ability to rehab theirs + raise

What was the outcome?

6 months later, I have doubled the size of the yard with all the clearing, performed a unit turn raising rent over $600. Raised properties income from $2400 to $4300 and living for free in a massive 1600 sq ft 3 bedroom. Gave the other tenants a smaller 250 increase and fixed up attic space to rent as storage. Tenants were ecstatic that I have been fixing things that were neglected for years and based on units in Clinton trading for about $200k a door, the property will likely appraise for 750k+

Lessons learned? Challenges?

Biggest lesson I learned in this experience is to tell EVERYONE what you are doing/trying to do. You never know when an opportunity will pop up in front of you. Second though, is the importance of delegating if you want to scale. Although I saved 20-30k by doing everything myself and learned a ton in the process, doing that sucked up all my time and potentially stopped me from buying multiple multis last year. So going forward I will be delegating much more to free up my time.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Huge thanks to Bo Stevens from Jean D'arc credit union, for helping me get a solid loan with a 6% interest rate with a super smoothe process.