Developed my Investment scalpel

[Patrick Haug]

Investment Info:

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

Purchase price: $174,900
Cash invested: $50,000
Sale price: $375,000

This was my original investment purchase, a two family building. Originally, I purchased the building and rented the other unit to my long time friend. Fast forward to toward the last year of my ownership, I changed the floor plan of the apartments. They were large 1 bedroom units with dining rooms, I converted certain rooms within the structure to other functions, updating the bath and kitchens converting the units into 2 bedroom units.

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

This was my first purchase, it was a building where I was going to live. It was close to an entertainment district and within a short commute radius of two major universities.

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

I found this deal through a friend that was utilizing a local real estate agent that was very involved in investment property real estate. I walked through the property before it was placed on the MLS and was got the property into contract.

How did you finance this deal?

I used VA financing. Since this was my first real estate deal, I was very able but limited by my financial reserves. The VA loan helped me tremendously.

How did you add value to the deal?

The value I was able to bring to this bit of real estate was identifying the highest and best use of the floor plan and making changes to the existing floor plan to bring about those highest and best features. The apartments were spacious (1200 sq ft) 1 bedrooms, I converted the floor plan to 2 bedroom units and significantly increasing the investment income of these apartments.

What was the outcome?

This was a wonderful investment for me. I was able to see my dreams for the building come to fruition and acquire a handsome sale price/profit from my efforts.

Lessons learned? Challenges?

Having a strong pool of competent contractors was vital. I am so appreciative to those individuals that helped me during my stewardship of this property. Since this was my first investment, I used this property to quell my fears of not being able to rent a vacancy, interacting with tenants, and being the one to take action when a problem is reported.

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

I utilized local real estate agents.