Our biggest deal ever

[Cynthia Nina-Soto]

Investment Info:

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

Purchase price: $503,000
Cash invested: $433,256

This property was originally a doctors office in a single family zoning. Currently the apartments are bringing in $5812/mos. The coin op laundry generates $300/mos and income from parking is another $650/mos. The property recently appraised at $1.4M and we have secured a $1M mortgage against it. Current monthly cash flow is $379 and my office is free. Assuming the office is rented to a 3rd party my expected cash flow would be $1579.

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

We wanted to stretch our abilities. This property had really good bones and is located less then a mile from downtown. We threw a BS offer thinking it wasn't going to stick and after a little back and forth we made it work.

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

This was an MLS deal and I negotiated directly with the agent.

How did you finance this deal?

Cash purchase. Cash rehab.

How did you add value to the deal?

We converted an old doctors office into a mixed use building with one commercial office space and 3 residential rental units.

What was the outcome?

ZBA approved our plans. After almost a year of work all the residential units are rented and I have my own office less than a mile from home.

Lessons learned? Challenges?

We started the build out and hit lots of road blocks along the way. While we were waiting on the ZBA approval, which was a condition of our purchase, the city changed the building code book used and as such we now had to add sprinklers to the building. This created a domino effect which triggered lots of other code requirements. our rehab budget doubled as a result. Next time ask the building dpt. when they expect to change the code book.

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

I was the real estate broker on the other side :-)