Investing in Belair Edison

[Austin Carroll]

Investment Info:

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

Purchase price: $93,000
Cash invested: $15,000

This property was BRRR'd. Bought as part of a portfolio with 4 other properties, this property needed about $10,000 of work and then refinanced at a value of $124,000, allowing us to cash out almost exactly what the purchase price was and only need to leave in the repair cost and closing costs, equalling roughly $15,000.

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

The attractvieness of this investment came because it was part of a undervalued portfolio that was being sold by the owner. The property was almost in rent ready shape and was about 25% below market value.

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

This deal was found on the MLS, however we asked the owner when he met us if he had any other properties, he said yes, and we looked at his whole portfolio, negotiated a reduced bulk price and were able to buy all the units and refinance them within 9 months.

How did you finance this deal?

This deal was purchased with a community bank, raising the 25% down needed along with a small construction budget. We then refinanced out with the same bank, the increase in valuation was enough to pay back all investors from the original purchase.

How did you add value to the deal?

Value was added by negotiating hard and making it easy for the owner to sell us the whole portfolio, and then by taking on 11 units in scattered sites.

What was the outcome?

It was the starting blocks to building a 55 unit portfolio. We got to scale quickly, which allowed us to take bigger risks on other projects and provide a solid cashflow base.

Lessons learned? Challenges?

The biggest lesson we learned was accepting a unqualified tenant so that we could refinance quicker. In order to reach the banks required DSCR we needed to rent out one more unit from the portfolio and we laxed our standards and ended up having a nightmare scenario with a tenant staying in our unit for 8 months with only ever paying us the security deposit and 1 the first months rent.

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

I am a real estate agent and own a small team so we used my expertise throughout the process. For financing with the deal we used Ken White with Revere Bank.