4th Buy & Hold Investment - Long distance investing

[Eric Van Deman]

Investment Info:

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

Purchase price: $295,000
Cash invested: $88,500
Sale price: $442,000

4th Buy & Hold investment - Two adjoining duplexes in beach communities near Tampa, FL.

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

Cap rates were getting compressed in my local market, and with the intention to utilize a professional property manager, I expanded my search area to other markets.

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

Through Loopnet, I came across a number of interesting listings around Tampa, so I started reaching out to property managers in the area. We found a great one who was very helpful in our search and steered us towards the beach communities near Tampa as a blend of cash flow and potential appreciation. This deal was a pocket listing of a property she managed from another investor who was looking to sell and cash out.

How did you finance this deal?

Conventional financing with 30% down. The down payment originated via a 1031 exchange property that we had sold in Denver, CO.

How did you add value to the deal?

Believed we were buying in an area that hadn't yet fully recovered from the housing bubble and would have potential for above average appreciation. We installed new roofs, and continued to maintain the property, but did not do any substantial renovations.

What was the outcome?

We sold the property within 4 years of our purchase for ~50% more than our purchase price, generating a very positive IRR. We then rolled the proceeds via a 1031 into eight student housing units in Florida.

Lessons learned? Challenges?

We faced the same challenges as any other out of state investor, and were forced to find a trustworthy property manager to act as our eyes and ears on the ground. Initially this was very challenging, but over time our property manager earned our trust and her recommendations helped us in the long run.

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

Brenda Bianchi with Brenda Bianchi Realty & Property Management