1st Duplex property now in Operation!

[Francois Frigon]

Investment Info:

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

Purchase price: $317,000
Cash invested: $64,000

Through my LLC, we recently bought a new construction duplex in New Braunfels Texas near San Antonio.
Good original numbers, but the reality shows different.

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

Apparently good market to be in.
Purchase price was about 20% below market value

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

I found this deal 2 years ago when looking to invest in new construction properties (duplex / triplex) in the greater San Antonio area. After 2 years of construction, we finally closed in mid-March and both units are now rented.

How did you finance this deal?

My LLC put 20% of the sell price, and the bank financed 80% (20 year term at 6.5% yearly)

Lessons learned? Challenges?

The Proforma advertised by the seller was based on personal loan terms. When you buy through a LLC, not only it is very hard to find a bank willing to do Commercial loans, but the terms are not that great (30yr term VS 20yr, Int Rate higher).

My challenge now is to find a way to increase the rent by around 7% in 2020 to improve my bottom line numbers

[Austin Smither Langley]

@Francois Frigon, sometimes lowering costs can be just as beneficial as increasing rents.  This property looks pretty new and clean, which means you'll have to get creative to add value or reduce costs.  Some potential ways that you can manipulate rent and costs include:

• Reduce vacancy using professional listings, photos, and showings (good first impressions increase tenants willingness to sign up to pay more rent)
• Metered utilities for each unit (make sure utilities don't cost you money)
• Including/covering landscaping and ext maintenance vs. making that the responsibility of the tenant
• Get creative and use one TV/Internet service account for the entire building and every unit to use (increase rent and reduce costs)
• You can charge more for month-to-month lease agreements than annual lease agreements

BP has an article here with some other ideas: https://www.biggerpockets.com/blog/13-ways-increase-rent-add-rental-property/

Hope that helps