First Investment (hopefully of many)

[Alex Staunton]

Investment Info:

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

Purchase price: $799,000
Cash invested: $240,000

This was my first investment deal. It's a buy and hold. I put in more cash than I wanted it to be since it under-appraised and I had to throw in an extra $20k. With the down payment, closing costs, and rehabbing 3 of the empty units, I'm into for ~$250k. It was in decent shape, just needed some touching up. It's a big front house (4 family) in the front and a carriage house (2 family) in the back. it's also only a 5 min walk to the beach in Asbury Park, NJ which has been on the rise.

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

I originally wanted a beach house/investment combo, maybe just 2 or 3 families and it kinda snowballed into a bigger investment focusing on cash flow. In the future, after we're more financially secure, we may do a more substantial rehab on the ground floor 2 bedroom (about 1300 sq ft) into a beach apartment for ourselves.

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

It's a really competitive market, usually against cash buyers. I ended up going $100k over the asking price of $699k to a $799k offer and handshake agreement to keep the tenants in place. It was previously owned by a charity that placed the tenants there.

How did you finance this deal?

7 Year ARM, 30 Year Amortization starting at 5.75%

How did you add value to the deal?

New Floors and Paint in all common areas as well as empty units. Cleaning up the grounds outside.

What was the outcome?

It's still a WIP. With renovations to the current apartments after those tenants turn over, I should be able to increase the rent roll from the $8,500 when I purchased the property to around $10,000.

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

I worked/am working with Jack Green Realty who helped with the purchase and property management. He also is a contractor and was able to work with me on the rehab. It's been great to only have one point of contact across everything and have an actual contractor showing you the units and getting quick estimates on rehab costs.