FBI busted down the door 3 months in

[Kristi Kandel]

Investment Info:

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

Purchase price: $352,000
Cash invested: $22,000

4unit rental property in Columbus. One of the tenants ended up getting busts by Homeland security 3 months after we purchased the home. They found over 80lbs of heroine and caused about 7K of damage to the property. We were able to repair the unit and now airbnb it for $400 more a month than the monthly rent that we were previously collecting from the LTR rent.

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

We wanted to bring a friend into real estate investing and this deal was perfect for his first investment property.

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

We found it on the MLS and just submitted the full price offer in a very competitive market (deals are only on the market for 24-48 hours) with limited contingencies to get our offer accepted.

How did you finance this deal?

We brought in a local partner who was open to an owner occupied house hack and wanted partners to manage the tenants since this was his first investment property.

How did you add value to the deal?

Put very little cash in the deal and after the Homeland Security Drug Bust of the "stash house" unit we repaired it and converted it to an airbnb within 3.5 weeks of the incident bringing in $400 more a month in rent than just signing up another LTR lease.

What was the outcome?

In the first month of airbnb it seems to be working very well and allows us to give more work to our local handyman and his wife who cleans the airbnb unit. Which works out well to have them frequently at the property so they can pop into the long-term units as necessary for repairs.

Lessons learned? Challenges?

Do a background check of all tenants for any property you purchase even if they have existing leases. While you typically can't terminate leases you do have the choice to walk away from the deal if something sketchy comes up in the background checks. In the end we will make out better from immediately turning the unit into a short-term rental but it was quite the 3-4 weeks of experiences with Homeland Security, FBI, Sheriff's office, handymen, etc.

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

Nope.