My 1st Deal, Duluth Triplex

[Matt J.]

Investment Info:

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

Purchase price: $115,000
Cash invested: $28,750

This was a property that had been listed earlier at $155,000, but the seller wanted it gone. I think he had some trouble tenants and wanted to move on from landlording. He evicted two of the units, fixed them up, and listed the property at $125,000. I offered $115,000 and was able to close. I still own this property now.

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

I live in the Twin Cities, and properties here are a little bit more expensive than I could afford. I attended college in Duluth and new it was a good place to be a real estate investor due to reasonable property prices and higher-than average rents.

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

I found this deal through my agent, offered $10,000 less than list and closed. There wasn't a lot of negotiating required.

How did you finance this deal?

Conventional financing through Northstar Bank in Duluth.

How did you add value to the deal?

I replaced an aging boiler, repaired the roof, a door and a few other things.

What was the outcome?

After closing and getting the property leased up, I refinanced to take out some cash towards the purchase of another property.

Lessons learned? Challenges?

I learned to overestimate repair expenses, vacancy rates, and CapX. The challenge with this property is it's not in the greatest neighborhood, so finding solid tenants can be a challenge. We've had one cash-for-keys situation already.

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

Yes, Jordan DeCaro was my agent, and Steve Raj was my lender. I'd recommend them both to anyone.