5 Unit Apartment Building - Second Deal

[Lucas Miles]

Investment Info:

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

Purchase price: $98,500
Cash invested: $35,000

Property had a significant amount of deferred maintenance, but structurally sound and in a great location.

Completed full rehab on one of the units, and smaller updates in the other units. Rehab was more expensive then I estimated, but was able to split 3/5 units to separate electric, and add a separate office/storage area in the basement.

Will rehab the other units as tenants move out, and eventually split the last 2 units to separate electric.

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

To step into the apartment investing for higher cashflow.

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

Driving for dollars. Conversations directly with the seller.

How did you finance this deal?

Commercial lender and rehab with personal cash reserves.

How did you add value to the deal?

Completed remodel of one of the units. Add separate electric meter to one of the units. New and quality tenants.

What was the outcome?

Rehab was a lot more than I expected. Finding quality tenants takes time (especially end of fall/winter).

Lessons learned? Challenges?

My due diligence was poor, missed a lot of things during walk through. Seller lives out of state so was difficult to get into the apartments (especially during middle of COVID). Did not negotiate with the seller enough. First time working with a general contractor. Did not spend enough time estimating what it would cost to rehab everything it needed.

Property however still cashflows very well. Will not get as high of first year return as I was expecting, but still very happy with the results.