Small MultiFamily Purchase Days before the COVID ball dropped

[Darson Grantham]

Investment Info:

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

Purchase price: $125,000
Cash invested: $15,000

Packaged Deal with this property and the property right next to it. Bought it off-market by calling a For Sale By Owner Sign in the yard.
Total monthly rents at purchase were 1800/mo fully rented. Owner pays ~350/mo utilities
As of Nov 1 2020, total monthly rents were 2525 by simply increased current tenant rents up (still 15-25% below market rent)

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

At the price the owner was asking, there was instantly 15-25% equity at closing.

I really like the economics of Des Moines, and this area, in particular, has some potential upside, but CURRENTLY cashflows, which is important to my investing motto. Buy for cashflow, with a potential appreciation for the icing on the cake.

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

Sign in yard, negotiated for 2-3 weeks to come to terms.

How did you finance this deal?

Received a bank loan for 80% of the total purchase price and financed the remaining (down payment) with private money (second mortage) at 10% interest over 12mo.

How did you add value to the deal?

Increase rents and cosmetic upgrades when tenants moved out (2 of 4 units turned over)

What was the outcome?

Massive equity over a 12 month period by buying at a good price, knowing the value, and choosing good tenants. (so far)

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

I bought this prior to becoming an agent. Deals like this would not hit the MLS, they would be sold be sold prior to the "public" seeing it. YOu would have NEEDED boots on the ground to purchase this due to the owner's ONLY marketing via a sign in the yard.