5-Plex Near The Falls

[Eric Jackson]

Investment Info:

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

Purchase price: $285,000
Cash invested: $75,000

My wife and I partnered with two other couples to purchase this diamond in the rough. We found it on the MLS. It was listed in such a way that it didn't show up on Realtor or Zillow. Instead, my wife found in through her work as an assistant appraiser. Originally listed for $300,000, we offered $275,000 and they countered at $300,000. We countered and the seller accepted our second offer of $285,000. This is a 5 unit property with the following attributes:

Unit 1: 3B1B - occupied - Current rent $675 >>> Increased to $750
Unit 2: 2B1B - occupied - Current rent $595 >>> Increased to $750
Unit 3: 2B1B - unoccupied - Rehab Estimate $5,000 >>> Potential rent $800
Unit 4: 2B1B - occupied - Current rent $425 >>> Increased to $700
Unit 5: 2B1B - unoccupied - Waiting for previous maintenance guy to complete rehab >>> Potential rent $800

Total potential rent: $3800

Unit 5 was recently vacated and is in the process of getting flooring through the previous maintenance guy. It should be ready to rent within two weeks. We plan to renovate Unit 3 for around $5,000. It will be ready mid-February. We are raising past rents up to market rent and we intend hold it forever. When tenants move out, we plan to upgrade the windows, appliances, electric heaters, and kitchens as needed.

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

Team up to get part of a great deal and a little extra monthly income for managing it ourselves.

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

MLS listing that was not showing up on Realtor and Zillow.

How did you finance this deal?

Commercial Loan with 20 year amortization and a
10 year balloon pmt.
4.62% interest rate.
5 year rate reset.
Monthly PMT: $1,373.81

How did you add value to the deal?

Raised rents closer to market rents.
Rehab 2 vacant units.

Lessons learned? Challenges?

Have multiple financing options open to you and don't be afraid to switch to another financial institution if yours is dragging its feet.