3-Family in Poughkeepsie, NY bought Feb 2018

[Chris Gahn]

Investment Info:

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

Purchase price: $180,000
Cash invested: $40,000

3-Family up and down with 2 3BR/1BA and 1 1BR/1BA. Walking distance to NYC Metro North commuter train station and downtown area with restaurants and shops. Doing more rehab as I go, tenants have been good so far. 2/3 apartments are renovated, finishing the third now.

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

I owned one house that I had been house-hacking for about 6 years. I had learned a lot of maintenance and repair skills, so I decided I wanted to graduate to a multi-family. Three doors in one building seemed like a great deal in terms of maintenance, and the neighborhood was definitely transitioning into a better situation. I had been sitting on some cash for a while waiting for the chance to invest and finally pulled the trigger!

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

I found this on the MLS using an agent. I searched for about 2 months before making an offer. The asking price was 165K and I offered 160K and wrote a nice letter to the seller. The seller said they liked my offer and that I was putting 21% down with a commercial mortgage, but that another party had offered 180K, and if I could match it they would sell to me. I decided that even at 180K the cashflow was great, so I met their asking and we had a deal.

How did you finance this deal?

I put down 21% with a local bank and got a commercial mortgage.

How did you add value to the deal?

1) On the first floor I've been upgrading my tenants each year and have gone from $1200/month to $1300/month with better tenants.
2) I took the middle floor from $1100/month to $1400/month with a fairly big rehab that improved the look and the space considerably.
3) I am currently doing some small renovations on the third floor, mostly paint and flooring to improve the space. I expect to take that apartment from $800/month up to $1000/mo and have it rented in September or October.

What was the outcome?

The property is cash flowing nearly $1000/month after expenses and vacancy. I couldn't be happier!

Lessons learned? Challenges?

Two weeks after I closed, a storm knocked a branch onto the power line going to the house, so I had to spend $2000 to get that fixed by a licensed electrician. Two weeks after that I had a gas leak in the basement that cost me $1500 to find and fix.
Also, at one point the county health department came to the house to test for lead and I ended up having to replace about 18 windows in the house which cost me around $7K.

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

Frances Chiu was my agent and she's great! She stayed on top of the deal from the start and I had communications with her every day throughout the process. She really kept the deal on track. She had helpful suggestions along the way also.