VA Loan - Buy and Hold 4-unit multi-family.

[Jonathan Johnson]

Investment Info:

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

Purchase price: $150,000
Cash invested: $15,000

4-unit apartment house. One 2br, Two 1br, and an efficiency apartment downstairs. Shared space has washer/dryer hookup.

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

Moved into one of the units while renovating bathrooms and floors. Needed two new bathtubs and replaced all carpet with vinyl flooring because I wanted to rent to people with pets (major shortage of pet friendly apartment opportunity). Other three units paid for the mortgage and repairs with $6,000 cash back from seller for repairs. Now the property pays for it's mortgage and our personal mortgage.

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

I negotiated it down a little, but the major benefit was the cash back for repairs. I think we did that under the table.

How did you finance this deal?

VA-Loan for veterans. As long as it's 4 units and under, and you intend to live in it. They finance 100%!

How did you add value to the deal?

Vinyl flooring, and paint from Sherwin Williams "Oops" stock ($1 per gallon of mis-tints). I did have to replace the electric meters which cost me somewhere between $700-900.

What was the outcome?

This property cash flow's great! I'm not sure if I can refinance because of the new higher income, but I intend to own it till I die.

Lessons learned? Challenges?

Stick to your screening convictions. The previous owner was renting to felons that were not OK to have with my young family. Often with lenders you can push the first mortgage payment out a month so you're in there for 1 to 1.5 months before the first payment. I used this to ask the tenants to leave, fix up, and re-rent.