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Updated over 5 years ago on .
My Very First Deal in Real Estate
Investment Info:
Small multi-family (2-4 units) buy & hold investment in Mcallen.
Purchase price: $215,000
Cash invested: $56,354
3 units building built in 2014.
What made you interested in investing in this type of deal?
It was a relatively new building with no need TLC and fully rented. It seemed a good option to start my real estate portfolio.
How did you find this deal and how did you negotiate it?
It was listed in the MLS and my real estate agent gave me the lead.
How did you finance this deal?
Own savings
How did you add value to the deal?
I am passing utilities expenses to each tenant by allocating utility bill. I will be adding a water meter to each apartment so in the future each tenant will have their own bill from the utility company (city). Rents were below market so I will increase the rent in the next lease.
What was the outcome?
For the first experience it was not really bad. The buying process was smooth. Had a bad experience with the seller that after signing she came to me to tell me that one of the tenants owned the refrigerator of one of the apartments. All paper work said it came with three refrigerators. So tenant left and took the refrigerator and I had to buy a new one for a new tenant. I am thinking in filing a civil suit for breach of contract against seller.
Lessons learned? Challenges?
When I was close to sign I learned that previous owner was paying the utilities bill and I hadn't taken that into consideration in my analysis. So when adding that, the cash flow and ROI dropped drastically. I am passing that expense to tenants now, but I will definetly learn from the experience and be more diligent in investigating all expenses when analyzing.
I am currently managing them, so my challenge is to have them make enough cash flow to hire a property manager company.
Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?
Arlen Gracia, Real Estate Agent
Edgar Hernandez, Lender