Good cash flow, great potential!

[Patrick Menefee]

Investment Info:

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

Purchase price: $153,000
Cash invested: $47,000

Each unit of this quad contains 2 bedrooms, 1.5 bathrooms, approximately 900sqft, and is currently occupied! It’s on septic, but tenants pay the remainder of the utilities

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

My entire portfolio is built on multi family properties. When I was presented with this opportunity it was a no-brained to add to the portfolio

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

A friend/agent in Fayetteville, NC sent me a message notifying me that this property was about to hit the market. After getting a little information we found that it was going to be listed for $159,000, and got a verbal agreement from the seller for $150,000. We added $3,000 to the purchase price to get some of the closing costs financed and the seller agreed!

How did you finance this deal?

I partnered with a couple who are out of state investors, and we used conventional financing to purchase the property

How did you add value to the deal?

The value add will be a work in progress. The neighborhood is rough right now due to some vacancies, a couple of condemned buildings, and a private road “maintained” by the owners of the neighborhood

Adding value to this deal won’t come from improving the property, but from working with property owners in the development to either fix up the houses and the roads or buy the rundown houses

What was the outcome?

The greater outcome will come in the future as other properties are acquired in the neighborhood, but in the meantime we’re going to capture a combined $500 of cash flow every month

Lessons learned? Challenges?

It’s always important to think outside the box, but maybe sometimes you need to go a step further and step outside the property altogether. In this case, working with other owners to change the neighborhood will be difficult and incredibly challenging but will ultimately provide a fantastic opportunity

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

Thanks to Mike Glaspie and the team at Five Pillars in Fayetteville!