Duplex near Lindwood in OKC

[Ben Scott]

Investment Info:

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

Purchase price: $120,000
Cash invested: $30,000

This duplex was a For Sale By Owner. My partner and I negotiated the terms outside of my capacity as an agent. The duplex already had two existing tenants. The property was poorly marketed, in my opinion, and the owner insisted on representing herself

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

We were seeking a multi-family unit that was undervalued or an owner desperate to sell

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

Zillow. We negotiated directly with the owner

How did you finance this deal?

Traditional bank financing with a 30-year note

How did you add value to the deal?

The tenants were unhappy with the previous owner/landlord. We made some improvements and promises that encouraged the tenants in each unit to sign a new 12-month lease.

What was the outcome?

The one bed unit rents for $500. The two bed unit rents for $800. We carry the water bill because there is only one meter and our mortgage is $616. Rough cash flow is $500/month

Lessons learned? Challenges?

There was no sewer cleanout at this home. The line started backing up shortly after we bought it. The only solution was to build a new cleanout which cost $1700. I'd hesistate to buy a home without a clean out in the future.

[Ben Scott]

Thanks @Son Tran. The home appraised for $125k so we had $5k instant equity. Both sides were occupied and wanting to sign new leases so no rehab costs aside from the plumbing issue. A partner and I each put in an equal portion of the 20 percent down payment and did a conventional mortgage at 4.75 percent.

And @Will Fraser the owner had it listed as a FSBO for almost six months. I think she put the tenants out by showing it herself.