4 Unit Buy & Hold: Payne-Phalen, Saint Paul, MN

[Eric Gunderson]

Investment Info:

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

Purchase price: $225,000
Cash invested: $45,000

Contributors:
Mike Sevcik

Four unit building which needed cosmetic updates. Each unit is a 2 bedroom, 1 bathroom unit. The property contains off street parking for occupants.

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

I was actively looking for more buy and hold opportunities in St Paul, MN.

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

I had purchased a 7-unit building from this seller the previous year. He mentioned he had a couple other properties, and I stayed in touch with him. We agreed on price and closing date at a McDonald's. It was a pretty easy, straight-forward deal.

How did you finance this deal?

Conventional financing with a 50/50 partner.

How did you add value to the deal?

Rehabbed units as they became vacant. Outfitted each unit with new carpet, paint, cabinets, vinyl plank flooring as they turned over.

What was the outcome?

A steady cash-flowing property with 4 stable occupants.

Lessons learned? Challenges?

This was the first purchase as a partnership, and still pretty early in my investing career. There were some growing pains with property management, and finding the right occupants in the beginning. If I did it all over, I'd try to purchase the property vacant so I could get in to update the units right at the beginning. I think that would have helped attract the occupants we were looking for.

Lesson learned: it really paid off to keep in touch with this seller! Don't burn any bridges.