Deal Deep Dive Lee Ripma Episode 373 in Liberty, MO

[Lee Ripma]

Investment Info:

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

Contributors:
Trista Fenner

This was my Bigger Pockets episode 373 deal deep dive. I found this property on Facebook buy/sell group and closed November 2018. Partnered with Derek and Trista Fenner as local partners. We bought it for 150k with 10% down seller financing and turned all the units over year and a half. The property appraised for 380k and I refinanced it in May 2020. I got nearly all of my cash out and the property will cash flow around $1000/mo.

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

Bought way under market value and I knew I could turn the units with the help of my incredible local partners.

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

Found it on a buy/sell Facebook group. I didn't negotiate on price, I gave the seller what he wanted for the property. He in turn gave me seller financing for a year and a half.

How did you finance this deal?

10% down seller financing with 6% interest for the acquisition. My own cash for the DP. For the labor to turn units my local partners donated a lot of it. We split materials and sub-contractors 50/50. Total cash invested was around 85k. After the refi we will have about 20k left in the deal total.

How did you add value to the deal?

We turned all four units and raised rents from 600/mo per unit to 795-850 per unit. We could achieve this upside due to great finish and the addition of washer dryer hook ups.

What was the outcome?

A nearly BRRRR-fect deal where we got most of our cash out of the deal but will still collect great monthly cash flow.

Lessons learned? Challenges?

It always takes a while to turn units with tenants. We had two evictions. We only kept one of the original 3 tenants. Rehab takes a while and is expensive!

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

Derek and Trista Fenner are incredible local partners and I could not have done any of this without them!

[Lee Ripma]

@Joseph M'Mwirichia

Thank you! I met them through BP before I ever invested in Kansas City. We had dinner together at a local BBQ place and working together developed organically though time leading to a partnership about 2 years after we first met.

It’s interesting about inherited tenant ratios holding true. As a scientist I love to discover a constant underlying ratio in the universe ;)