1st Multi-family (and investment property) purchase!

[Erik Mihlsten]

Investment Info:

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

Purchase price: $1,475,000
Cash invested: $750,000 (including 300K for reno)

3 Unit property each 2bd 1 bth - It was the ugliest house on the block and it was also in an area where there haven't been many multi-family properties.

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

This was the first investment property we would be buying. I liked the idea of a multi-family for the lack of reliance on a single tenant paying rent. With the goal of buying and holding, it gives a bit more of a security net. If, in a multi-family property, a tenant didn't pay rent or moved out, there hopefully is still another tenant or 2 (or more) that are able to help cover the mortgage.

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

Scouring zillow and redfin. Have a realtor that I engaged to help drive the deal.

How did you finance this deal?

Cash then after the remodel did an appraisal and took out a traditional loan.

How did you add value to the deal?

Found the deal, created the pro-forma model, managed the process and managed the remodel

What was the outcome?

Has been continuously rented for 5 years and is cash flow positive. Happily the modeling I did for it was spot on and has been cash flow positive from the start, well exceeding the monthly mortgage payment

Lessons learned? Challenges?

Reno budget, reno budget, reno budget. This was my first project and quite challenging. Still learning.