8 unit for a single family price

[Charles Clark]

Investment Info:

Large multi-family (5+ units) buy & hold investment.

Purchase price: $245,000
Cash invested: $35,000

Offer price = $245k
Seller paid $5k in closing costs
Purchase price = $240k
Down payment = $36k
8 unit x $600 = $4800 monthly rents
Commercial Loan is a ballon loan for $196k
Interest rate = 3.99% for 5 years then balloon payment of the remaining amount.
Monthly mortgage payment = $986
Monthly expenses = $2,052
Total monthly expenses = 3,038
Monthly cashflow = $4800 - $3,038 = $1,762
NOI = $28,176
CoC ROI = 31.67
Pro Forma Cap = 11.5%

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

The numbers and the location was too hard to pass up. $4800 monthly rent for a $240k property. The cashflow shows the property is worth $480k so this was a value add opportunity. This type of property makes a real estate investor career. This property does need some improvements and there is still room for the rents to increase. It was under contract and fell through because the seller was not willing to make any improvements.

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

This was a gem we found on the MLS for over 200 plus days. Communicated with the seller's realtor to learn what the seller is really wanting.

How did you finance this deal?

Commercial Loan with a 5 year ballooon. 3.99% interest rate

How did you add value to the deal?

Running the numbers and knowing what the property is worth under good management

What was the outcome?

Purchase a property that brings in about $40k a year and we were able to purchase it with a down payment of $36k. We will make our down payment back in less than 2 years.

Lessons learned? Challenges?

Communication is key. Always keep a cool head.

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

Yes, my agent is Amber Otto and she was a good asset to have during this deal. The other agent was not always on top of things and she was there every step of the way to make sure the other agent did his job.