First BRRRR and first multifamily deal was a success!

[Matt Pastier]

Investment Info:

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

Purchase price: $36,000

This was my second deal as an investor. This was my first BRRRR and put me on the path to multifamily properties. I finished this deal around May of his year. We put new tenants in that we screened ourselves and it's worked out great.

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

My first deal was a SFR, but I knew I wanted to move into multifamily. When I found this property I knew I was going to have to use more tools to make it work, and realized I had found my first BRRRR opportunity. This was the catalyst for my next two multifamily deals.

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

It had been sitting on the MLS for months. It had tenants but needed lots of work. They were asking $70k. I offered $30k. We landed at $37k. BUT - the contract was not signed that day, and the next day he decided he wanted $47k. I walked away. Almost 4 months later we heard he was really itching to sell, so we offered $37k contingent on the property being vacant at closing and got the deal done. After a mistake by title, we ended up with a final price of $36k.

How did you finance this deal?

I borrowed from my 401k to buy it cash with some extra for rehab.

How did you add value to the deal?

We rehabbed the interior of both units. We did new paint, 20 year warrantied commercial vinyl plank flooring, new counters, painted cabinets, new appliances, new light fixtures, painted the basement, among others. We also ended up having to repair the 2nd floor balcony, plumbing, electrical, and a few other unexpected items.

What was the outcome?

The building appraised for $88,000! I ran my numbers based on a $70k appraisal to be safe, so needless to say I was pleasantly surprised. It still cash flows over $200 per door, and I got all my money back plus an extra $10,000. I have none of my own money left in the deal and this put me on the path to buying more multifamily.

Lessons learned? Challenges?

Yes, my biggest mistake was not getting a signed contract immediately. The realtors planned on it happening the next morning. If he had signed the contract that night, we would have had ended up in the same place (just 4 months sooner!).

[Taylor L.]

Good on you for walking away when he upped his price int he middle! That wasn't going to be the end of it. Give an inch and they'll take a mile.