Downtown 6 unit multi-family for $90,000?

[Kevin Porter]

Investment Info:

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

Purchase price: $90,000
Cash invested: $150,000

My fiancee and I purchased the old Music Center in downtown Ashland, Wisconsin. It was listed on the market for $90,000 (!) and it contained 6 units. The building had a beautiful brick facade, and had been built in 1891 by local city leader, Samuel Vaughn.

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

I've looked for real estate investments with positive cashflow for years. It wasn't until I came to Ashland Wisconsin when I found deals that actually penciled out and made sense.

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

I found it listed on the MLS. The owner did not want it due to the deferred maintenance, so we were able to purchase it for less than the original asking price of $125,000

How did you finance this deal?

Local Lender Chippewa Valley Bank provided a rehab loan of $125,000.

How did you add value to the deal?

Thoughtful spreadsheet work and general contracting. Negotiating with sub-contractors for good rates and making good choices about which work was most important to get the building rentable and cash-flowing.

What was the outcome?

$1,500 to $2,000 positive monthly cashflow after expenses and loan costs.

Lessons learned? Challenges?

Homework is critical. Banker partners are phenomenal. Conservative numbers on the spreadsheet helped to get past some scary moments.

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

I was working as a real estate agent at the time. My lender, Matt Crowell did a great job with the lending side of the project. Jolma Electric did a phenomenal job replacing the electric. Dugger Heating and Cooling came through in the clutch to hook up the new furnaces. C&S Design did our engineering approvals for the new HVAC systems with the state for a good price. And the City of Ashland was phenomenal to work with, led by building department head Megan McBride.