First Apartment Acquired

[Andrew Carlson]

We recently acquired our first investment property. It is 12 units, 35 minutes west of Minneapolis, Minnesota.

Purchase price $720,000

Appraised $755,000

My wife and I put $70,000 down, second mortgage on our house, and my dad put $30,000 into a 2 year CD with the bank we financed through. The CD is just sort of an ‘insurance policy’ for the bank should anything go wrong.

We got 4.16% with a 5 year balloon, 20 year amortization. I was extremely happy with that interest rate. Just one year ago I had financing for this same deal locked in at 5.6%. Just by chance, the deal took one year longer than expected, which was frustrating but worked out to our advantage saving us about 1.5% on interest.

The apartment is one nice big building. It has five 1 bed units and seven 2 bed units.

I plan on doing some work to the common areas right away. Parking lot, landscaping, laundry room, hallways.

The rents were bumped $25 by the previous owner (after we negotiated purchase price) which really added value for me right out of the gate.

There is an on site manager that gets his rent reduced by $500/month to take care of the building (turning units, collecting rent, lawn, repairs, cleaning common areas).

We are very excited about the new adventure.

We have a lot to learn, but have a really great mentor in the guy that sold the building to us.

If there’s one thing another newbie should take away from this, it’s that you can do it too!! We are just regular folks that had a vision, worked hard, saved every penny we made and made it happen.