Fourplex Buy and Hold in Albuquerque, NM (first property)

[Michelle St. Claire]

Investment Info:

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

Purchase price: $205,000
Cash invested: $39,000

4-Plex in C neighborhood.
Purchased November 2018.
All 2 bd/ 2 ba units.
Rehabbed one vacant unit, the remainder are rented and will rehab once (if) they vacate. They are good tenants so I am in no hurry to motivate them to leave any time soon (I could charge an extra $100/mo per unit once remaining are rehabbed).
Total cash invested includes down payment and approx $9,000 on initial rehab work.
Average monthly cash flow is approx $300 while I make small improvements.

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

I knew I wanted my first investment property to be a fourplex as I could get a conventional loan and I would minimize the risk of full vacancy. Plus, it's kind of bad-*** to start with that.
I selected Albuquerque as I made a solid connection there with an experienced RE investor/Broker/Property Manager. That connection was invaluable to get started (and still is invaluable as I seek to expand).

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

My broker bought it to me as he was approached to sell it and knew it would meet my criteria. He was the agent for the seller and buyer. There was no negotiation as the seller was adamant on the price and I knew it was a decent deal as was.

How did you finance this deal?

I got an FHA loan and moved into the vacant unit so I could help with the rehab and take care of deferred maintenance. I was able to work remote with my job during my time there.

How did you add value to the deal?

I rehabbed the vacant unit so was able to increase rent for that one by $125/mo. I gated the entrance so tenants feel more secure and fixed some of the deferred maintenance. Waited 12 months before increasing the rent on the existing tenants once they could see the improvements made externally.

What was the outcome?

The intention was to stay in the unit for 1 year working remotely with intermittent travel back to California, however, I had a leadership change who no longer supported this arrangement. Now the property is fully rented with minimal headaches. It has been a great first investment.

Lessons learned? Challenges?

Take the plunge! I didn't spend too much time agonizing over the deal analysis deals once I knew what a decent price point was for the area and the rents. I just wanted to get my feet wet and knew that long term buy and hold is pretty forgiving.
I also learned (which I suspected going in) that purchasing a fourplex doesn't need that much extra diligence than a single family or duplex. But the returns and income are more stable.

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

Yes, Chuck Sheldon. He is my broker and property management company. He is a big time investor himself and knows Albuquerque inside and out.
And Jens Nielsen (who is a BP member) for the initial coaching and connection to Chuck.