First Long Distance BRRRR

[Travis Moe]

Investment Info:

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

Purchase price: $175,000
Cash invested: $38,000

Contributors:
Corey Clarkston

2/1 Bungalow with a 1/1 apt over the detached 2-car garage. Separately metered and addressed. Picked it up by submitting a 3-option counteroffer to the seller. Ended up with seller financing with 20% down, interest only until refi. This allows the property to cash flow even though the rents are sub-market.

When leases expire, the plan is to rehab both units. The 2/1 will remain a LTR. I plan to pivot the 1/1 apt to a STR. This should bump cash flow up nicely.

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

I like small multifamily as a gateway to growing into mid-size multifamily. I also needed to look beyond SoCal where I live since cashflow is very hard to come by here.

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

I found the deal and brought in my agent and my property manager to help vet it. Negotiations were handled by my agent (Danay Guenther-Root Realty). It went back and forth a few times. We got locked up on price and I was about to bail, but I thought I'd offer the seller a 3-option counter. I told the seller I could either get my preferred price and take the place as-is, come up to his price and he delivers place vacant, or meet in middle with seller financing. He chose #3.

How did you finance this deal?

Seller finance. 20% down. 6.5% interest only until refi.

How did you add value to the deal?

Will be replacing roof and some plumbing. Cosmetic updates once the leases expire.

What was the outcome?

So far, so good. Tenants are onboarded. Have my estimates for repairs. Just following the plan.

Lessons learned? Challenges?

Closed on 12/26. Day after a major holiday and just a few days before another one (New Years). I'll never do that again! Finding notaries, sending wires, talking to title attorneys on vacation, all with holiday travel and stress.

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

Danay Guenther - Agent, Root Realty, Jacksonville, FL
Corey Clarkston - Property Manager, Saint Johns Properties, Jacksonville, FL (he's also a BP member)