Recent Option in Puerto Rico

[Sergio Baerga]

Investment Info:

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

Purchase price: $72,000
Cash invested: $23,000

Triplex in Bayamon, Puerto Rico. Foreclosure. Minimal rehab necessary, roof with danosa(good shape), only 1 kitchen to be replaced and 1 bathroom and a paint job. $1,575 rent estimate.
Loan 6.5% at 30 years with 25% downpayment.

Unit 1 (studio)
Unit 2 (2 bedroom/ 1 bathroom)
Unit 3 (1 bedroom 1 bathroom)

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

27.09% cash on cash return $725.24 monthly cash flow.

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

I purchased it from the bank offered half of the asking price, then I was accepted at $80,000 once I walked thru and re ran the rehab numbers i lowered the price to $72,000 waited 4 weeks more and the bank accepted $72,000. If it doesn't cost you money to offer, run the numbers and offer away, you learn and meet new people each time you do this.

How did you finance this deal?

Financed it under the LLC that I formed when i purchased my first property off Xome.com auction.
This one is from a credit union. I coudn't use banks because they charge commercial loans, have shorter terms higher interest, and some balloon payments.
This will be in the corporations name, for 6.5% 25% down and 30 years. (3 points closing costs)

Lessons learned? Challenges?

I learned to offer on many properties, practice negotiating, get along with everyone, as you miss 100% of the shots you don't take. The original asking price on this house was $143,000. Run the numbers and offer what works for you.

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

Not really, currently studying to be a real estate agent myself, as many realtors on the island do not have great response times, nor do they go the extra mile to find the deal (nor run the investment numbers).