Blue Bridge Property #3

[Dave Hutson]

Investment Info:

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

Purchase price: $172,500
Cash invested: $4,987

Contributors:
Matthew Tanis

2 Unit in Grand Rapids. We purchased this from an obvious flipper and unfortunately paid retail. The purpose of this purchase was to upgrade to a "nicer" asset than our first property purchase. We transferred a roommate that is living in one of our Broadway property units into the main unit of this property. Cash flow meets the $100 per door requirement. We anticipate the main unit renter to be a long term renter; ie stable cash flow.

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

My team and I were looking to "upgrade" [find a bit nicer neighborhood, with a bit nicer property, that would attract a bit nicer tenant] from a C to B- neighborhood. We also had a tenant at our Broadway property that wanted to rent from us long term.

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

MLS - we negotiated through our agent based on the 1% rule and our cashflow requirements.

How did you finance this deal?

Approximately $5k out of profits from other rentals cashflow and the remaining down payment with a HELOC. Conventional 30 year fixed rate financing overall.

How did you add value to the deal?

We do not intend to add much "value" as it was sold by a "flipper". We will look for two stable tenants to generate steady cashflow.

What was the outcome?

A purchased, cash flowing property.

Lessons learned? Challenges?

I do not think we will look to purchase from flippers again. We did require a home warranty which we have already had to use (within 30 days of ownership). We will look to add full home warranty protection (including appliances) into future deals as this helps hedge and stabilize cashflow.

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

Kristin Moore from Keller Williams Grand Rapids East.