MLS still has some Diamonds in the ROUGH

[Gaston Prevette]

Investment Info:

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

Purchase price: $260,000
Cash invested: $35,000

We found These 2 quads which happened to be on separate parcels on the MLS. Wewere able to successfully reposition them to a cashflowing property for us which has helped us purchase additional properties in 2019.

Property Details:
2 4 unit buildings
All Brick
2/1 -750Sq/ft
Hardwoods in one of the quads
Separately metered ( water/ electric)
Can Trash can pickup provided by the city
Adjoining Properties that share a common area
Washer hook ups in units
Clothes lines in back of properties.
One unit had all new replacement windows
Low Crime Report
Near Bus stop
Local shopping

Deal Details:
Asking Price was $300K
Purchase Price - $260K
7 of the 8 units were occupied
Two 4 unit all brick quads
Out of state Landlord with bad property mgt in place, high expenses and below market rents helped us realize the opportunity to re position
Rents were significantly below market in some units ( >/=$150)
Buildings/Properites in need of a lot of love but still in great shape and all brick
Long term tenants with 80% being month to month

Strategy:
Buy Right, Manage Right and Finance Right # WheelbarrowProfits

When we took over first part of January 2018 the gross rents were around $2900/month.
We knew that rents were under market between $100-$150 ( in some units) and with many of them being long term tenants we decided to approach them with our plan for improving their units, the property and increasing their rents to market rates.

We know that it is more cost effective to keep a good paying existing tenant than it is to find a new one, so we decided to give them options. You can stay, sign the new 1 year lease, pay the new market rents and we will improve your unit significantly or it would be time for them to find a new apartment.

We decided to start from the outside in and began beautifying the property by removing the overgrown bushes from the front of the building, along with the trees that were swallowing up the units. We then had a new roof installed on one of the buildings and improved the landscaping for both buildings. We then had to pull about 10 truck loads of trash out from the crawl of one building, and do some minor repair underneath for plumbing, subfloor and installed new vapor barriers for both units.

As we were improving the outside and addressing issues in the crawl space we were working to turn the vacant unit. It needed quite a bit of work but after the rehab we were able to get it rented for $525/month

- new windows, LVP installed throughout, toilet, flange, new vanity, new plumbing, new doors/hardware/hinges throughout, paint cabinets/ new hardware , paint throughout, new base board units, new window AC units, new entry/ exit doors, new stove/ fridge, light fixtures throughout, handrail for outside stairs

We then moved on to our lowest paying tenant ( $338) who had been there 17 years. He bucked our offer initially but after looking around and considering the cost to move he was more open to our offer of improving his unit for the new rental rate of $495/month .

We provided him with the following:
All New energy efficient windows, new AC units, Completely re did his bathroom ( new subfloor, new flooring, new toilet, new vanity, new lights), fixed his kitchen floors( which he said had been sinking/falling apart for the last 3 years ) and the leak he had been dealing with behind the walls for YEARS in additions to new storm doors front/back.

*once all of this was completed he shared with our crew that he finally felt appreciated as a tenant, was proud of where he lived and was thankful for the new owners. Also that he would have been willing to pay more years ago had they just fixed the issues he was dealing with **

Now that we had proven out our concept we worked with the remaining tenants to address any outstanding issues and in turn increased their rents to market averages.

In less than a year we are currently generating just shy of $4100/ month in gross rents and have a fully stablized property. With many of the big ticket capital items dealt with in our first year ( new roofs, new windows, etc) we can now focus on keeping our tenants happy and our units occupied while we move onto to our next bigger deals.