Selling a few single families to buy multi-family (Gladstone, MO)

[Brock Thomas]

Investment Info:

Single-family residence buy & hold investment in Gladstone.

Purchase price: $43,500
Cash invested: $20,000
Sale price: $165,000

I rented this house for 9 years and collected over $80,000 in rent. I remodeled it after the first tenant stayed there for 7 years. I raised rent $300 a month for the next two years and have sold it. I currently have the proceeds of the sale with a intermediary to do a 1031 exchange. I am currently negotiating on a 6 unit. When I bought this it wasn't even a great deal. I bought it because it fit the criteria I had for rentals and I already owned a few in this neighborhood.

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

Location and floor plan

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

This was a foreclosure auction on the courthouse steps

How did you finance this deal?

I paid cash. I later put this in a line of credit with a few other rentals to maximize my cash efficiency.

How did you add value to the deal?

I rented it back to the guy who lived there for 7 years. Bank of American did this guy no favors and shouldn't have been able to foreclose on him. He passed away and I updated the house then. He rarely asked me to make any repairs because he was handy and treated it as if it was still his home. The second tenant took great care of the house. I just did a couple minor repairs after she moved out and received multiple offers when it hit the market.

What was the outcome?

It cash flowed from day one and I had a nice exit. My goal is to 10x the number of units with the capital from the sale and greatly improve my cash flow.

Lessons learned? Challenges?

The long game is where it is at. When I bought it was a terrible time to sell. When I sold it was a great time to sell. I could have easily rented this house again but I think I maximized the ROI.

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

I am a licensed Realtor so I found, managed and sold it but I worked with many great contractors and professionals during the process. Having a great team is so important. I do the real estate but have many professionals and advisors to handle other aspects in the business.