Mixed use seven unit property on AITD

[Anthony Katsonis]

Investment Info:

Large multi-family (5+ units) commercial investment investment in Pacific House.

Purchase price: $500,000
Cash invested: $112,000

Mixed use commercial property with 3 offices and 4 residential units.

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

Definitely the 4 residential units... Not the Office units, as that was a bit out of our comfort zone at the time, as we see a lot of vacant office/retail space around town. This property happens to be one of the only office space properties on this side of town though and has good frontage on a main road in town, so it has always had a good track record of staying rented. One of the offices has also been a real estate office for 40 yrs, and I plan on moving my real estate office there some day.

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

We had known the seller and had been bugging him for years, that if he ever decided to sell to give us first right of refusal. As he got older he eventually decided he was sick of being a landlord and gave us a call. We asked him if he was willing to do some creative financing, and we decided on an AITD.

How did you finance this deal?

AITD or All Inclusive Trust Deed (Wraparound Mortgage).

How did you add value to the deal?

Remodeled one out of four of the residential units so far, and we are raising rents as we go along.

What was the outcome?

So far so good, though it's only been a few months. Our plan is to roll all of the cash flow toward the principal and pay it off in ~4-5 years.

Lessons learned? Challenges?

It pays to develop relationships with invetors in your area, and to let them know that if they ever get tired of being a landlord, that you'll be happy to take the property off their hands :)

Snow removal costs and headaches can really add up in a bad winter. Make sure there are reliable snow plow companies in the area that you are planning on investing if you are buying in a snow prone area and are providing snow removal for the tenants. I am now the not-so-proud owner of a snowblower :|

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

Thank you BiggerPockets for the education and motivation necessary to inspire me to invest!