An investment retrospective

[Alfred Mansfield]

Investment Info:

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

4 flat plus 1 non-conforming basement unit. 100% rented. Gentrifying neighborhood.

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

We wanted to own income property because we knew it was an almost assured but slow to mature investment. We wanted an investment that would help us fund our child’s college education.

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

We looked for what seemed forever (before Al Gore invented the internet) by scanning newspaper (print) for sale ads and driving and walking neighborhoods that were reasonably close to us.

How did you finance this deal?

We used personal savings and lots of bank loans.

How did you add value to the deal?

As apartments vacated we slowly and incrementally improved each unit. On Halloween a few years after we bought the building the boiler failed catastrophically. We did a real stretch then and installed individual HVAC units. That meant our units had air conditioning and individually controllable heat and the tenants were paying for the utilities! Again at the worst possible moment, the building’s hot water heater failed and we added super eff tankless water heaters.

What was the outcome?

Bank loans have long been paid down, college educations paid and now helping to support our retirement.

Lessons learned? Challenges?

We should have added additional properties!