4-plex Near Kansas City, MO

[Rick Novotny]

Investment Info:

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

Purchase price: $415,000
Cash invested: $83,000

4-plex with about 11-12% cash-on-cash. This is my lowest cash-on-cash return purchase to date. I decided to purchase it due to it being in a nicer neighborhood and it's a newer property compared to what I was holding previously in my portfolio. Definitely satisfied with the decision.

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

This property aligns with the rest of the portfolio. I love multi-family properties due to fewer closings and paperwork. The cashflow tends to be better too :P

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

I found this property on the MLS. Got it under contract for full list price at $425,000. After inspections, negotiated $10,000 off the price.

How did you finance this deal?

I used to credit union portfolio lender in the local area of the property. 20% downpayment from savings.

How did you add value to the deal?

Have not done anything with this one yet. Just closed last week. The units are all occupied/inherited tenants.

Lessons learned? Challenges?

One of the units had a section 8 tenant in it. My management company won't deal with section 8, so I had to negotiate with the seller to provide 60 day notice for this tenant prior to closing. This tenant has been in this unit for 13 years, so there will likely be some minor renovations needed. This is how I negotiated $10,000 off the purchase price. Unsure what that will cost until she moves out.

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

I would recommend Community America Credit Union as a portfolio lender. I purchased 3 properties with them in 2019 and the process was incredibly easy. They helped me add 10 units to my portfolio in 2019 with $1,000,000 property value. I will continue using them as I grow my portfolio in the area.

[Rick Novotny]

Originally posted by @Aaron L.:

@rick congrats on the new acquisition. Would you mind sharing the terms that Community America has offered you such as rate, term, amortization, etc? Thanks!

Aaron, this one is at 4.5% fixed for 5 years. After the term I can decide the pay it off, cash out refi, or just refi it without pulling cash out. I'll decide as the term gets near the end, depending on where I'm at. The P&I on this one is about $2,100 per month, with about $4,300 rent revenue.