8 Unit in Valparaiso

[Jennifer Wilson]

Investment Info:

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

Contributors:
Matthias Wilson

This was an off market deal that my husband and I purchased directly from my Broker. The property consists of eight, 2 bedroom, 1 bath units in two separate buildings. The roofs are newer, but other than that, the complex is very dated with little done to it cosmetically so rents were under market value at $525-$560/mo. We purchased with the intent of fixing up the units as they became available. As the leases expire and tenants move out, we are rehabbing the units with vinyl plank flooring, new counters, staining/painting the cabinets, updating the bathrooms, and painting from top to bottom. We are then increasing the rent to $750/mo or more.
This property has been a little more difficult than others as our tenants haven't been as reliable as we were hoping. We have had to complete two evictions due to non-payment, we didn't renew a tenant due to their lack of cleanliness inside and outside the unit (along with other issues), and have had one tenant that never ran the A/C or opened windows in our tropical climate, which caused issues with mold and mildew throughout the unit. In addition, we've also had issues with tenants introducing bed bugs to the property. Overall, this has been a great learning experience and has made us want to pursue more multi-family properties, but it is also proving to be much more hands on that we were expecting.

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

Co-workers encouraged me to pursue this deal. It is very hands-on, but it was also a good next step in our investing careers

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

It was an off-market deal that we purchased directly from the owner.

How did you finance this deal?

A commercial loan through CCB in Niceville. We had the cash available for the initial down payment.

How did you add value to the deal?

We have been fixing up this property ever since we have purchased it. Improvements include: painting exterior, new landscaping, remodeling interior as the units become vacant. Rents increase as the remodels are complete.

Lessons learned? Challenges?

The rental price point has been a challenge for us. We have found that some tenants are not as responsible with money and that they don't necessarily take care of their stuff as much as we would prefer. We have had to complete evictions and clean up after tenants more than expected.

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

Alan Wood with CCB in Niceville was our lender. He was great to work with!