MLS Fourplex in Pittsburgh with AMAZING 28% COC!

[Constance Kawa-Small]

Investment Info:

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

Purchase price: $112,000
Cash invested: $37,000

For those who need some encouragement out there, here's a deal from the MLS that gives me an AMAZING 28% COC!
Fourplex in the suburbs of Pittsburgh, each 1bed/1bath.

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

The possibility of reaching my financial freedom through less deals. I'm focusing on small multis (2-4) which allows me to purchase more doors with one transaction, since I am financing deals with cash and traditional loans. The ability of managing rentals and projects with one location is also a plus for buying small multis being an out of state investor.

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

Found on the MLS and negotiated through my real estate agent. Comps were very limited, so we just put an offer the very next day of hitting the MLS for slightly less than asking price ($7K less). Also negotiated upon receipt of inspection report, getting $2K credit from seller, totaling a purchase price of $112K.

How did you finance this deal?

30 year fixed traditional, 25% down

How did you add value to the deal?

Rehabbed 2 vacant units (paint, floor, kitchen cabinets redo and bath)
2 more still to be rehabbed once we have tenant's turnover and exterior paint in the near future

What was the outcome?

All In $37,000 (down payment + closing + rehab)
Yearly Cash Flow $10,392
Average of $215 per month per door
An AMAZING COC Return 28%

Lessons learned? Challenges?

Main Lessons:
1. Overestimate even your conservative rehab costs!
2. Plan for the possibility of rehab to go over the projected completion time
3. Make sure to buy the right flooring (duh moment, don't even ask!)

Challenges still facing:
Electrical panels and HVAC systems are not split, so I pay for utilities and build that cost on my rents. I still get my AMAZING 28% COC, but would like to split all utilities to transfer those expenses to tenants.

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

Yes, my Real Estate Agent Max Feinberg is outstanding and we've developed a great partnership that hopefully will last for many more deals to come!