First multi family rental BRRRR

[Ben Baye]

Investment Info:

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

Purchase price: $70,000
Cash invested: $14,000

two story duplex needing update in lower unit and full renovation in upper unit

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

Building capital for more investments

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

I met with a potential client for an addition and during the conversation investment properties came up. I mentioned I was looking to start a portfolio and they reciprocated with a desire to get rid of one of their properties. I scheduled a showing and made an offer with two options. They countered with a combination of both offers and I drew up a P&S.

How did you finance this deal?

Through bank: 4.25% 20 Yr Amortization to purchase, switching to 4.25% interest only construction loan for 1 yr on purchase price and renovations (aprox $65k), this will transfer to a 4.25% 20 yr amortization commercial loan when Reno completed. I can pull up to 80% ARV post Reno.

How did you add value to the deal?

Lower unit: new floors, texture and paint walls, new light and plumbing fixtures, new doors
Upper unit: making a larger kitchen with an open concept living dining and kitchen, new floors, rock, tape and paint throughout, new trim and doors, new cabinets and new bathroom
New windows and siding, 12x12 decorative concrete patio for each unit, new concrete floor in garage, new driveway, removing elec baseboard heat and putting naturally gas forced air in both units.

What was the outcome?

Will provide when completed

Lessons learned? Challenges?

I did not know that I can use the equity to cross collateralize multiple properties as down payments instead of withdrawing the money as cash for reinvestment! This was first property I’ve purchased without a realtor and it was very straightforward, the process was actually rather fun!!!

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

Tom McCarthy at Cumberland Federal Bank
TM Title for closing