My First Multi-Family Deal!

[David Christoffel]

Hi BP!

My name is Dave Christoffel and I'm officially a real estate investor in Midwest Wisconsin! Until this point in time, the only sort of real estate investing I was doing was rifling through the MLS, bothering realtors on a daily basis, number crunching deals I found, listening to BP podcasts (which there simply aren't enough of), attempting to network with more investors as stoked as I am about real estate, and waiting for the numbers in my bank account to give me the green light to buy. Being a recent college graduate, it took me a while to accumulate enough liquid capital to purchase a multi-family investment, two years to be exact. However, the two years (although painful) were well spent learning and practicing for the long anticipated moment of closing on a property. This particular property is located in an A class neighborhood in a generally older aged community.

Drum roll………and the numbers:

Purchase Price: $154,000

Down Payment: $5,390

Loan Term: 30 years

Interest Rate: 4.25%

P&I: $731.07

T&I: $258.33

Closing Costs: $4000

GSI: $20,040

Less Vacancy: $1,603

Actual Annual Income: $18,437

Total Operating Expenses (maint, adv, garb, ect… included): $5,800

Net Operating Income: $12,637

Annual Debt Service: $8,773

Cash Flow: $3,864 ($161 per unit/month)

COC Return: 41.15%

Cap Rate: 8.21%

Obviously the COC Return looks ridiculous, and rightfully so, as I used a FHA with 3.5% down to secure the loan. This also is not the world's greatest deal in terms of numbers, but it's the fundamentals of investing and the muster of courage that this deal represents. Nevertheless, this is an exciting time and I can't wait to use this as a building block for more opportunities in the real estate world!

I’d like to thank BP for the inspiration and knowledge I have gained to date on real estate investing, it is truly miraculous!

Cheers!

Dave

[Marcus Auerbach]

@David Christoffel Congratulations! I think you did better than you give yourself credit for! Cashflow and CoC ROI are important, but there are a few other things that matter more - especialy long term. Many are too concerned with the next 12 months - this is real estate, it is long term by definition, guys! You have bought in a good neighborhood with potential for appreciation. Your rents may go up as well because of that. The property is hopefully in good shape and you don't need to spend a ton on capex. And if you do improve, that market will credit you with a higher property value. Great job!