First Investment Property

[Scott Stephens]

Investment Info:

Small multi-family (2-4 units) private money loan investment in Eureka.

Purchase price: $205,000
Cash invested: $82,000

Purchased 4 plex with tenants in place. Have re-modeled each unit one at a time when tenants have vacated. Maintained positive cash flow while improving property.

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

Property met the 1% rule, was in an area I liked and was convienent for getting to after work/weekends.

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

MLS through realtor.

How did you finance this deal?

Private Money Loan - down payment was part savings, part gift. Wanted to hold 20% equity even though this was not a requirement of the loan.

How did you add value to the deal?

Recieved $16,000 credit on sale for partial sewer line replacement (bid for $21,000), cost me $400 to do myself.
Recieved $3,000 credit for handling tenant eviction (tenant was 6 months behind on rent). Hired third party to do eviction,cost me $2100.

What was the outcome?

This property has allowed me to gain an invaluable amount of experience in renovation and property management and the cash flow has allowed me to fund improvements to the property.

Lessons learned? Challenges?

For small multifamily properties, being able to maintain cash flow while working on separate units can be very effective. Also very challenging when you are doing electrical and plumbing.