Quadplex in Nashville TN (37211) - Analysis

[Spencer Lathrop]

Investment Info:

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

Purchase price: $370,000
Cash invested: $20,000

Quadplex in south Nashville (Nippers Corner). Negotiated an offer the day it hit MLS by a long distance landlord. Immediately did a light renovation ($2,000-3,000) on the two vacant units that brought those rents to market value. Increased cash flow by $540 within 2 months of purchase and has been cash flow positive since March of 2019. Our plan is to hold this for at least a few more years, completing similar renovations if other 2 units vacate

The deal:
- Sale Price: $370,000
- Total monthly rents: $3,475
- 50% owner in the deal
- Private funding monthly payment: $1226 (20 year amort.)
- My monthly cash flow after debt service, before expenses: $510

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

Huge fan of value-add properties. This particular one was mismanaged and under market rents. Owners lived out of state and were not operating the property at its full potential.

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

This was a unicorn! It was listed on the MLS for $549,000 for months and months. Finally they dropped to $395,000 out of the blue and we made a $370,000 offer within hours. Not sure how we got out of that without much competition.

How did you finance this deal?

Private funding / 50% partnership

How did you add value to the deal?

Of the 4 units, one was vacant and another had a problem tenant. I believe our biggest value add was doing a quick, 2-3 week renovation on both of these units while continually managing the expenses. Each unit was quickly rented for $175/month more than they were in previous conditions and I still believe they are under market.

What was the outcome?

Within 2 months of purchase the 2 value-add units were renovated and rented out. Property is cash-flowing and growing equity ever since.

Lessons learned? Challenges?

Know your neighborhood! There is nothing wrong with vinyl countertops or Sears Scratch and Dent appliances as long as the work done to the unit is honest, safe, and professional. In this instance, the easiest way to increase our bottom line was through well managed expenses. Also, always be kind and available for your tenants - make your service a reason for them to stay.

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

Scott Hines with Benchmark Realty!