Round two, let's fight!

[Kat Hughes]

Investment Info:

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

Purchase price: $156,000
Cash invested: $44,000

Our 2nd investment property! 3 Unit Multi Family: 1 3 bed/1bath, 1 1bed/1bath, 1 Studio Apartment.
Great property with long term tenants on the smaller units and the 3 bed/1bath unit was owner occupied. The larger unit needed a little bit of work done and we put in about $5000 in repairs. Rented out the top unit for $1100, bottom units are renting for $780 and $550. All in expenses are 2,130 giving us a profit of $300/month.

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

Our first property in Los Angeles is a multi family. We used to live in a small 2 bedroom 1 bath apartment in North Hollywood and paid 1250 in rent. Our multi family in LA is a 3 bed 2 bath front house with a 2 bed 1.5 bath duplex behind us. With the rents from behind us plus we're house hacking two of our bedrooms in our house, we're living RENT FREE!!! Knowing how successful multi units can be, we decided we needed to keep investing in these types of properties!

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

Through our realtor, Pete Zizzi from Remax. He's a friend we've known for over 20 years.

How did you finance this deal?

Conventional Loan, 20 percent down.

How did you add value to the deal?

Small minor fixes to the upstairs apartment. We also put in new furnaces and separated the meters so that tenants pay their own heat. A year later we put in washer/dryer in the basement.

What was the outcome?

Everything was great! Until... 2 years later we had some electrical issues that we had to fix. about 15k in expenses but we've been saving towards capital expenditures and repairs so we had money to put towards that.

Lessons learned? Challenges?

We're managing this property from LA. Definitely learning that a good property manager that is there on ground is very important. We bought two properties at the same time and decided to manage both from out of state. Right now they are small apartments which is manageable but because we do want to scale up, we have to put a better system in place so we can focus on scaling up instead of micromanaging what we currently have.

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

Pete Zizzi from Remax in Rochester NY is great!