We've added a second property to our portfolio

[Kevin Seiler]

Investment Info:

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

Purchase price: $267,500
Cash invested: $65,000

This second aquisition is a duplex in Lawrence, KS. It is a new properting in a more desirable location than the 1st purchase. Both tenants are Section 8. I was a little concerned given some of the stories I have read about but given the current economic conditions and impact from Covid-19. Just to keep things interesting, there was a shooting at the property about a week after I purchased it. One of the current tenants kicked out an ex-boyfriend and he decided to shoot at the house. The only casualty was a shattered doorwall. The ex was arrested and charged. Always something.

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

Duplex in a solid neighborhood and a newer property. Also, it met my cash flow criteria.

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

It was brought to me by the realtor team that I have been working with in the area.

The seller owns multiple properties in the area and needs to sell properties due to financial and legal issues. Negotiation was through the realtor but he was difficult and not entirely forthcoming with information. Because of that, my first offer was about 20k below asking. Settled at $11.5k below asking. Appraised $10 above purchase price.

How did you finance this deal?

Conventional. 25% down. 30 year term.

How did you add value to the deal?

At this point, I haven't added any value, other than getting an appraise value of $10k above purchase price. The previous owner was basically did nothing to the property. He didn't even provide decent management. I hoping that with my property management company, we can get the current tenants to take more pride in the property and report problems in a timely manner. Over time, we will address deficiencies, many which were minor, that were identified in the inspection.

What was the outcome?

So far, so good. The housing authority promptly paid the Section 8 portion of the rent the very first month we owned it. The tenants have paid their portion.

Lessons learned? Challenges?

The biggest challenge was the previous owner. He has no ethical moral character. He was lazy and thought selling the property "as-is" meant that he didn't have to do what he was contractually supposed to do. In the end, it worked out. I feel I got the property for a good price. If I had known how difficult he was going to be, I would have held out for a lower price. He has other properties on the market. I won't even consider them.

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

Tanya Kulaga and her team were on-point and amazing. They were prompt to answer calls and emails. Arranged times to meet my daughter (she lives in the area - this is an out of state investment for me) to view properties. Properties that were not as advertised - i.e. disgusting. Naked tenants and difficult owners. I would recommend anyone looking to invest in the Lawrence, KS area to contact Tanya and her team.