College Place Tri-Plex

[Kavin Kuykendall]

Investment Info:

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

Purchase price: $250,000

This triplex is my first deal. I was able to partner with my parents to secure funding for the down payment via their HELOC. I pay them interest-only payments allowing me to maximize cash flow. I have slowly worked on improving management to increase cash flow from $0 to ~$800/month currently. I pour all cash flow back into the property, slowly renovating and increasing rents.

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

My goal is long term wealth building through cash flowing buy and hold real estate. I believe multifamily provides a number of advantages over single-family so I was looking for a 2-4 unit deal to build experience.

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

I found this deal on craigslist and negotiated directly with the seller over the course of a few months. Asking price was $270k, purchase of $250k.

How did you finance this deal?

I funded this deal with an FHA loan. My parents partnered with me bringing the down payment and a small reserve fund from their HELOC. I will pay them 8% annually for 5 years plus their HELOC interest before cashing them out.

How did you add value to the deal?

I knew going into this deal that it was poorly managed, under market rent, and had a number of deferred maintenance issues. I have slowly worked on turning this property around as capital allows.

What was the outcome?

While this project isn't done, I have so far increased the monthly cash flow from $0 to roughly $800 after all expenses.

Lessons learned? Challenges?

I went into this deal with no experience and very little knowledge of the market or real estate in general. I now believe I paid close to market value, if not a premium, at the time of acquisition. I see this deal as a great example of just how forgiving real estate can be. I paid too much, came in with no landlord experience, no construction experience, and yet now own 3 units cash flowing at $800 per month. With enough time, any real estate purchase can be a deal.

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

None, unfortunately.