First investment by investor group a partner and I started.

[Bryan Vukelich]

Investment Info:

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

Purchase price: $860,000
Cash invested: $400,000
Sale price: $1,125,000

This property was #1 of #2 that was part of an estate sale that an investor group, that my partner and I managed, acquired during the Great Recession. It had the same owner for many years and there was quite a bit of deferred maintenance. Positive note is that rents were below market.

Financing was a huge problem. Initially we were approved by a bank with approximately a 40% down payment. About 2 weeks prior to closing, lender stops returning my phone calls. I finally went to his office and learned that our financing had been pulled. With a substantial earnest money at risk, I was able to work out 12 month seller financing, however the seller increased purchase prices by $40K. Overall this investment worked out well for my investors and I, but would have been a sweetheart deal if we didn't have to pay the extra $40k.

Work we on property was remodel majority of the units, replaced all windows, replaced maybe 1/2 the sliding doors on deck, repaired and repainted siding and stairwell.

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

Seems like a great buy and hold opportunity.

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

Local realtor brought it to my attention.

How did you finance this deal?

Seller financing for first year then a local community bank.

How did you add value to the deal?

Did a lot of improvements to the property and hired a better property management company.

What was the outcome?

Worked out well for my investors and I.

Lessons learned? Challenges?

Be careful who you partner with - best not to partner with a person who cannot put "skin in the game" - no matter what skills or other value they say they can bring to the table.

Relearned the important lesson to be realistic about the scope and cost of improvements.