Baldwinsville, Buy and Hold, BRRRR

[Megan Shatraw]

Investment Info:

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

Purchase price: $89,900
Cash invested: $65,000

I purchased this 4-plex in June of 2018. At the time, the property was only producing about $1,100 a month in rent. It had a large commercial unit that had sat vacant for almost 2 years. Purchased the property for $89,000, put approximately $45,000 into it over the first 12 months of ownership. Grew the income to $3,375 with room for growth. Refinanced the property at the end of ‘19 pulling all our initial investment out and having the property appraised for $180,000.

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

I saw a vision for the vacant commercial space. After a phone call with codes and verifying I could turn this space into a residential unit it was a complete no brainer. I liked the rural location of this property that is in a great school district. The property had been neglected for about 4 years but prior to that was really well maintained. I was excited to tackle the projects and breath fresh life into this house!

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

I purchased this property directly from the owner. She had lived out of the state and had a hard time understanding the property and it's rural challenges (septic and well) She unfortunately didn't have the same vision for the commercial space and did not want to invest any additional cash into the repairs the house needed (two new small roofs, extensive reno)

How did you finance this deal?

We financed the initial purchase through a local credit union with 25% down. We had a majority of the renovation budget in cash but financed a lot of the materials through Home Depot and Lowes. Once the renovations had been done on 2 of 4 units (including the commercial) we refinanced to pull our cash back out.

How did you add value to the deal?

The biggest value add was the commercial space. Prior to this space going vacant, it had rented to a small bakery for $500 a month. We were able to turn it into a large two bedroom with a great floor plan which now rents for $1,100 a month.

What was the outcome?

I am fairly certain this will be my most successful investment. Not only was I able to pull my entire initial investment out but I was able to triple the rent. My proforma rent is actually closer to $3,800 a month so there is still room for growth, I also honed in on my expenses and the property expenses are about 40% of the rent.

Lessons learned? Challenges?

Overall this was a great experience, wish I could say all my investments have been this easy but that is not the case. Biggest challenge is learning how to landlord. There is a difference between being a landlord and a Property Manager.

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

I am a Real Estate Professional, I have over four years of both Property Management and Real Estate Sales experience.