My first small multi-family deal

[Jeff Mellum]

Investment Info:

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

Purchase price: $468,400
Cash invested: $125,000

I had three homes in three different cities (two states) that I had purchased following my job. As I moved with my job, I simply rented out my previous home and then purchased a home in the new area. Finally I settled and bought a primary residence. I wanted to sell my two SFR and roll them both at the same time (if possible) into one larger property.

I was able to sell those two properties and roll them into a triplex here in town. The timeline matched up and thankfully I got the deal done.

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

I wanted to convert both of my single family rental properties into a larger, single property using the 1031 exchange.

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

I was able to find this deal using a local realtor/investor that my dad knew

How did you finance this deal?

Using the 1031 exchange I financed the property conventionally (fixed) through the local bank using 25%+ down

How did you add value to the deal?

The rents had not been raised in a long time and the none of the units (triplex) had anything in the way of a fenced yard, only a back patio. I currently started incrementally raising the rents to get to the market rent, and am working to add fenced backyards on the outer units to increase the rent potential.

What was the outcome?

By just raising rents, i have doubled my cashflow and they are still well below market rent.

Lessons learned? Challenges?

I had a very poor experience with the realtor/broker i used. We had an agreed upon deal at a certain price and then just before closing of my two houses that i was 1031 exchanging into this one, the property hit the market. I had to up my offer significantly in order to not lose the deal.

I learned a lot through this deal...
I had a plan to increase the cash flow (which saved me)
I also learned who i would like to work with moving forward
Lastly I learned to push forward and not give up