Ongoing 6 Unit Property

[Peter Pratti]

Investment Info:

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

Purchase price: $275,000
Cash invested: $90,000

We purchased this 6 unit property when the rents totaled $3,350 per month. We have since increased the rents to $4,650 per month and are in the process of refinancing at a $400,000 valuation.

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

Extremely low rents, and high potential for growth.

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

We found this deal through direct mail marketing, and negotiating with an older gentlemen over a period of a month.

How did you finance this deal?

We used a portfolio bank in the area.

How did you add value to the deal?

We raised rents to market value and rehabbed two of the units in the building, which really boosted rents on those two units.

What was the outcome?

We are now able to refinance the property at a valuation $120,000 higher than we purchased.

Lessons learned? Challenges?

We offered a few tenants 2 year leases, which we think was a mistake. We perhaps should have done a 16 month lease or something similar if we wanted to have longer time periods.