E Philadelphia st showdown

[Cody Smith]

Investment Info:

Large multi-family (5+ units) buy & hold investment.

Purchase price: $106,000
Cash invested: $700,000

I bought 3 buildings as a package deal, 1-3 unit,1-4 unit,1-5 unit

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

The same realtor who sold me my first 2 unit mentioned this property to me. I brought it up to the partner I had on my first 2 unit and we became partners once again.

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

The same realtor and business partner who was involved in my first 2 unit property. The owner was a slumlord and the property was priced at almost $200,000. I negotiated the price to $106,000 based on the required renovations.

How did you finance this deal?

Business partner acted as the bank on this deal and I would be in charge of hiring contractors for the renovations.

How did you add value to the deal?

More of a life lesson than a value. I partnered with someone once again that gave no guidance. I was in over my head with no way out. The quotes I had from licensed/certified/reputable contractors was too high for my partner. My partner hired a fly by night handyman to do the project who was not qualified, in my opinion, to make toast. My $300k quote quickly turned to $700k when finished.

What was the outcome?

I own this building with this partner. We have a management company manage it. We overpaid for the renovations but the property pays for itself with no loss of cash. This could have been a cash cow, and I know one day it will.

Lessons learned? Challenges?

Lessons - don't be afraid to fire your partner, no matter how much money they have. Trust your gut. I let my age convince me that everyone else was right and I was wrong.

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

Yes. No.