Starting out on top

[Mitch Holmes III]

Investment Info:

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

My first real estate purchase was a commercial space in Brooklyn NY. I used it for AirBnB but after all of the nagging from the city and my neighbors I sold it back to the board. Also, NYC is expensive, risky and too tenant friendly to profit as a landlord. So I did my research for the best rental income markets for landlords and found out that PA had one the best northeast opportunities. So I jumped feet first into a 5-unit apt bldg. (4 apartments and 1 commercial space).

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

Single family units are too risky to me. What if the tenant loses their job or decides not to pay the rent? That would leave me holding the bag for the monthly expenses. Multi-units have way more leverage in that scenario.

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

My realtor pitched it to me about a year before I made an offer. The property just would not sell because of the repairs needed and the current tenants would not allow anyone to view the property.

How did you finance this deal?

Bank loan + cash

How did you add value to the deal?

I had 40% of the deposit

What was the outcome?

I got the seller to knock almost $20,000 off of the final price.

Lessons learned? Challenges?

The best lesson I learned is to never purchase a property that is already rented. The seller failed to tell me that not all of the tenants were current with their rents. One family turned their apt into a drug den. The previous owner allowed the section 8 tenant to practically live rent free as long as she didn't report any code violations to code enforcement. The first 9 months were a nightmare. I spent a lot of money on court fees, maintenance and non-stop repairs.

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

Wells Fargo