3 Family "Flip" in Fitchburg Massachusetts

[Jonathan Bombaci]

Investment Info:

Small multi-family (2-4 units) fix & flip investment in Fitchburg.

Purchase price: $231,643
Cash invested: $46,329
Sale price: $325,000

We bought this 3 family as part of a package of 8 properties totaling 23 units based on a 8% CAP Rate. They were all 4 units or less so we told the bank that the highest and best use was as residential properties. They did they did 8 separate residential appraisals using comps and that created over $500,000 of instant equity. Purchased for $1,850,000 and together they appraised at $2,356,000.

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

There was plenty of profit on the table and this was a product and location that we know very well

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

This was right on MLS and we offered to pay $50,000 more than asking since the numbers were really good and there was plenty of profit left in the deal.

How did you finance this deal?

Commercial financing with a local credit union, Jeanne D'Arc at 80% LTV

How did you add value to the deal?

Took it from 1 commercial portfolio and chopped it up into 8 residential properties. We also cleaned them up a bit so they would pass FHA financing.

What was the outcome?

We invested $ 46,329 and got back $109,452 at closing. So that's a $ 63,123 profit, or a 136% return on our investment in less than 6 months.

Lessons learned? Challenges?

Having a strong team is critical for doing something like this. Doing 8 flips simultaneously is a lot of work and cannot happen without a strong team.

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

My team, Candor Realty Group took on most of the responsibilities but we did partner up on some tasks from members of the monthly meetup we host, which is now virtual. We worked with Douglas Mercurio out of North Reading as legal representation and Jeanne D'Arc Credit Union provided the financing.

[Jonathan Bombaci]

Thanks @Sean T. Lowell is a tough market to find a deal but they do exist. What is the investment strategy are you trying to use?  

We just closed on a 4 family for a client last week who househacked and will be living for free, and the week before we did a 3 family for an investor client where the numbers make alot sense. Both of those were in Lowell, one on MLS the other was a For Sale By Owner (FSBO). You just need to get good at running the numbers and be patient. Then when a good deal comes along you need to act quickly with confidence to get it under agreement.

There were a few 2 families on Dublin St, and a 3 family next door on Cork st where the numbers worked well, did you see those? PM if you want to talk in more detail, our office in in Lowell and I know the area quite well.