First duplex part of 3 unit deal

[Aaron Rodriguez]

Investment Info:

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

Purchase price: $21,000
Cash invested: $1,000

Awesome 2-1 duplex that isn't in the best area in town. I have raised the rent slightly towards market rent on one tenant that has been a very clean and punctual. When first reviewing the lease for the second tenant I noticed that they did not meet my income requirement and thought to myself "they are going to be a problem". Fast forward 2 months of working out payment plans and not receiving rent I finally pulled the plug( like I should have done in the beginning). Rent for that unit is now 550

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

The power of having my money work for me. A 10th of yours is yours to keep. The equity being built as well as the cash flow to roll Into more deals is not too bad either.

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

I am a flooring contractor in my town and new the owner. I asked him what rent was doing and based my math off of that. He wanted 75 for the total deal but I told him for my investment strategy to work I can pay 67 and he agreed.

How did you finance this deal?

Owner signed over the duplex which he owned outright to me. I then used the equity in the duplex to finance the down payment and repairs on the single family unit. To make this deal work we made sure to use an attorney and stipulate that if I was not able to refinance the duplex within 60 days I would sign it back over to him at cost to me.

How did you add value to the deal?

Working creatively with my banker and offering solutions to the owners problems.

What was the outcome?

Three units that cash flow amazingly.

Lessons learned? Challenges?

Do better due diligence, I took the previous owners word on the quality of the roof and problems with the house.
Trust but verify, tying in with due diligence I should have hired an inspector to find the clogged lines from the city to the house and painted over water damage.

Do not give tenants that do not qualify a break, the tenant in unit b did not qualify to begin with and I should have evicted the first month he did not pay so that remodeling could begin.

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

I worked with kight law office in Dublin and Brian bowls with citizens bank. Brian especially went above and beyond to figure out a way to make this deal work. If it was not for his creativity and hard work this deal would not have happened