1st buy & hold property a 3 unit in Maine

[Carl Hebert]

Investment Info:

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

Purchase price: $111,000
Cash invested: $95,000

3 unit all 2brs. Completly remodeled and renovated. Everything inside is new in two of the units. New electrical, new plumbing, windows, doors, floors, ceilings, kitchens, baths, etc. Basically built new apartments in an old frame.

1 unit was renovated but not completly updated.

Current cash flow is $2600 as of 6/1/2020, this fall when family moves out the rent in that unit will increase the cash flow to $3300-3400 a month.

Current apprasial is $215k

First building bought and wasn't even sure would be buying more. Went above and beyond with some of the updates, our moms were going to be living in two of the units and we love our moms!

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

Just sold our home in Connecticut and was getting ready to stay in China for 3 years. We actually had no debt at all. Everything was paid off. Student loans, mortgages, cars, and credit cards. Both our parents were living in apartments that were not good for them. We bought this with the intention of breaking even with the rent to cover expenses and giving them a place that was nicer and less expensive then their current apartments.

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

We first found this on the mls for $140k. It was owned by an older couple who had been living in it since the 50's. After the inspection we put in an offer that was refused, so we backed out and started looking at other places. They actually removed the listing from the mls and a few months later we got a call asking if we still wanted it. All the other places we had looked at did not fit our criteria. We put in a new offer that was accepted at $111k

How did you finance this deal?

FHA 3.5% down. Through a mortgage broker. 30 year fixed at 3.25%

How did you add value to the deal?

Complete remodel of entire building see above. We did the majority of the work ourselves with family and friends. Electric and plumbing were the only big items we could not do.

What was the outcome?

Beautiful building that both parents loved. The third unit was able to be rented out for full market value which at the time was $900. The other two units we received $450 each.
Currently we receive $1200, $450 and $950 in rent, the $450 will be raised this fall/winter to at least $1200.

Lessons learned? Challenges?

Get quotes on items you can't do yourself. In hindsight we saw we paid too much for electric in one of the units. The plumber was great did excellent work, but was real expensive.

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

Debbie Bodwell at RMS was great.