17-unit Multifamily Portfolio

[Christopher Reeder]

Investment Info:

Large multi-family (5+ units) buy & hold investment in Winter Haven.

Purchase price: $825,000
Cash invested: $67,000

17-unit mixed multi-family, multi-parcel portfolio. Portfolio consists of 1/2 block comprising 4 upstair/downstair duplexes, a single family home and 8-plex. Single family home is in the middle of a partial renovation at time of acquisition.

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

My wife and I made a decision to look for scale with our next acquisition after investing in small duplexes and SFR. We had a purchase price limit we could support and looked for properties that fit near that investment limit.

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

This property came up on the MLS on a Saturday morning. Each morning I review all new listings based on my search criteria. By 7:30am, I was on the phone to my agent crunching numbers to prepare an offer.

Negotiations were more subdued compared to my last acquisitions. Seller advertised the listing with a note offering seller financing. This was the perfect entry for us. I focused on the terms of the purchase more than the price itself.

How did you finance this deal?

Seller financing was accepted with 19% downpayment, 20 year amortization, 15 year balloon and 18 months interest only payments.

Majority of downpayment was funded through a family loan with similar terms to Seller financing.

How did you add value to the deal?

Having closed only last week, the plan for the property is to bring rents close to market value, complete the renovation of the SFR and make some small updates to the remaining units. Seller maintained the property in very good condition during their 23 years of ownership.

What was the outcome?

The outcome of the acquisition is a success. The projected outcome of the value-add financial benefits is too early to determine. I'll update after several months of ownership.

Lessons learned? Challenges?

During negotiations, Seller had a family death which took them away from the negotiating table. At several points, I thought we were moving further apart instead of closing the negotiation gap.

One lesson I learned was to ask the Seller why they needed to sell the property. This can be a difficult question for a Seller sometimes, but it can yield great information. In their case, they wanted the monthly income without the responsibility of being the landlord. Worked great for me.