So painful this property kept me out of the market for 22 years

[Clay Gradis]

Investment Info:

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

Purchase price: $410,000
Cash invested: $100,000
Sale price: $1,450,000

I purchased this property, 2 four plexes, with 2 partners. We held the property for 24 years. This property was so painful to own in the first couple of years that I did not consider investing in real estate again until 2017.

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

I thought buying real estate would be a good investment, turns out it was an incredible investment.

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

A realtor friend of mine asked me if I would like to go in with some partners and buy a small apartment complex. I agreed and we started looking for properties. We found this one and bought it.

How did you finance this deal?

I and another partner went on the title, one for each of the 4 plexes. We took out FHA loans and bought the property.

How did you add value to the deal?

We ran the property for 24 years doing the needful to keep the tenants happy.

What was the outcome?

Over the last 24 years, we have refied the properties several times taking out a couple of hundred thousand each plus at sale we each received a couple of hundred thousand. A great investment. I took my money from this deal and did a 1031 into the 8 plex in Fort Worth were I faced the same pain over again, the lesson not learned, hopefully, I will learn the lesson this time.

Lessons learned? Challenges?

This property was a pain in the behind for the first couple of years, within the first month of ownership every tenant moved out. It is my belief that they were lying about their rent to make the property look better and sell for more and moved out rather than pay the rent we thought they were paying. It took many painful months to get the property rented up, in the meantime, I moved into one unit and paid rent to help cover the mortgage.