Nashville Triplex. PP $75K. Sold 12 months later for $231,400

[Ben Pospisil]

Investment Info:

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

Purchase price: $75,000
Cash invested: $3,500
Sale price: $231,400

Duplex with a 3rd (non-conforming) unit downstairs (C).

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

I knew I could invest a limited amount of capital and get some great returns based on the location.

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

I door knocked when I found this deal. The Landlord was outside the home collecting rents when I pulled up. I asked him if he was willing to sell and he said maybe. I offered him $70K on the spot and he said "Oh lord no. Its gonna have to be a lot more than that." I said " OK, how much more?" He said "At least $5K more." haha. I said "ok." and I went to the Fedex store down the street and printed off the contract.

How did you finance this deal?

Bank loan. 5/1 arm at 3% int. for 25yr. Put down 10%. T&I were $2000/yr. Payments were $575.

How did you add value to the deal?

Renters living in unit A and B were paying month to month @ $400/m. Unit C was vacant. Unit B moved out right before I closed. I invested $1000 worth of paint and carpet in to Unit B and moved in renters form Colorado for $1000/mth. I found a renter for Unit C at $900/mth and increased Unit A's rent from $400 to $600.

What was the outcome?

I held this rental for 12 months. Then was offered $240K by another investor.

Lessons learned? Challenges?

The C unit was using B units power. I was covering both units expenses but they ended up getting into a fight and B unit called codes on C units illegal power supply. And 1 week before my closing I lost both tenants!!!. Luckily My new buyer was happy because he planned on rehabbing both units..