15 Year Hold - finally time to sell

[Tim Swierczek]

Investment Info:

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

Purchase price: $230,000
Cash invested: $1
Sale price: $385,000

Contributors:
Jordan Moorhead

One of my favorite rentals in a great area of NE Minneapolis, but we had to sell to scale up. Multifamily syndication here we come.

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

Originally it was the long term cash flow, but I realized over time that the appreciation, depreciation, and amortization were very powerful benefits.

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

I found this because another investor walked away from it. The property was in poor condition and did not qualify for traditional financing. Basically, someone walked because the financing rate was too high for that investor. I saw that with a little work the house could be refinanced into a better deal later. We BRRRR'd this property before Brandon Turner had coined the phrase. Original price was $175K, but after the BRRRR refi we had a loan of $230K with no money from us in it.

How did you finance this deal?

We used savings, credit card advances, and 2 different private money sources to purchase and rehab the deal, then we did a portfolio refinance once the property was stabilized.

How did you add value to the deal?

The house was uninhabitable when we purchased it. We finished the rehab that had been started.

What was the outcome?

This was a high performing asset for us that produced cash flow and allowed us to refinance and use the cash out to buy another property. In the end, it was a wonderful investment and we only sold it to reach bigger goals. The new owner will do with this property.

Lessons learned? Challenges?

When you find a good deal don't let one detail get in the way. This deal made sense but the first buyer walked over a detail that was fixable.

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

Jordan Moorhead helped me sell. He is an incredible agent who I highly recommend.