Money for Nothin', 4 Plex for Free

[Owen Dashner]

Investment Info:

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

Purchase price: $186,000
Cash invested: $1,000

Contributors:
Collin Schwartz, Chris Pomerleau, Brandon Tauber

This is a 4 plex that we bought off of the MLS in Omaha for $100,000 below appraised value. Two of the units are townhome style 2/2's, the other two units are 1/1. Rents are $750, $750, $550, and $550, separately metered water and electric, plus there is a detached 5 car garage for extra income and coin laundry onsite. This was a smoking deal that we bought for cash and did a full appraisal BRRRR on 1 month later, recovering 100% of our cash, with an appraised value of $289,000.

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

This was a WAY underpriced 4 plex that hit the MLS just off of Leavenworth and 30th in Omaha. It was owned by a non-profit, and the list price was $150,000. It is a conversion, but the setup is exactly like a built for purpose 4 plex. Great layouts on the units, the units were in good shape, with minor cosmetics only needed. There is room to raise rents as well. The 5 car garage in this part of town is the cherry on top.

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

I noticed it when it hit the MLS with my saved search. I called my biz partner whose office is almost next door to the property. We called the listing agent and scheduled a showing. There were a million people calling about it. We took the time to build good rapport with the agent and she liked us. We ended up beating out much higher offers by closing quickly with cash, as-is.

How did you finance this deal?

We paid cash for it.

How did you add value to the deal?

The units were fully rented already, so we have not yet had to do much to the property. A couple units could use new flooring and paint upon moveouts.

What was the outcome?

We refinanced the property a month later with Dundee Bank to completed the BRRRR. It appraised for $289K, which was $103K over what we purchased it for. We pulled all of our cash back out, left $100K equity in it, and are now owners of a solid asset with nice cashflow and room for improvement.

Lessons learned? Challenges?

There are still deals on the MLS! This deal was out there for the world to see, so I guess the lesson here is, be prepared to act fast when opportunity knocks. Also, be nice to people. The listing agent told us where we needed to be to get the deal done because she liked us. Her phone was blowing up with showing requests and offers from rude people. The sellers wanted a buyer with minimal baggage and who would take care of the current residents and do a good job managing it.

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

Dundee Bank was great to work with, highly recommend!