Small Town Texas 4-unit

[Pete Harper]

Investment Info:

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

Purchase price: $135,000
Cash invested: $159,000

4-Plex in Rural Fairfield, TX. All four units are all 2BR/1BA. 1980's construction, front side brick. The roof needed to be replaced and we were able to negotiate the cost into the deal. All four units in poor condition with original faux wood paneling and dated flooring and kitchen.

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

The close proximity to our home. Most of our properties are 2hr + commute away so they have been difficult to renovate. We've also had to hire a professional manager cutting into cash flow.

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

Zillow search. I received email the day it was listed.
Negations took forever, four months back and forth. Property was owned by a brother/sister who did not get along. The mother would have to intervene to get a decision on the simplest items. Original price was $155,000. After inspection we discovered the property needed a new roof and other major repairs. Negotiated price concession after original offer based on inspection. Final price $135,000.

How did you finance this deal?

All cash deal.

How did you add value to the deal?

Replaced roof after closing. Two units were vacant when we purchased the property. We have finished the renovations on these units taking them down to bare studs with fresh new sheet rock, ceramic tile flooring, new kitchen cabinets, built in microwave and dishwasher. The plan is to renovate the other two units when they come available.

What was the outcome?

Work in progress. We have completed renovations on two of the four units. Rents raised from $475 to $675. As soon as the other two units are open we will renovate those units.

Lessons learned? Challenges?

My wife and I do our own renovation work. This was our most ambitious renovation to date. It was our first opportunity to hang sheet rock and install kitchen cabinets. We learned kitchen cabinets are cheap and easy. We ordered cabinets from Home Depot and installed them ourselves. Our biggest challenge was getting materials with Covid-19. It took 2 months to get the second kitchen adding months to the project.

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

Angela Kennedy was our agent.