First Investment Properties Making 8 Units

[David Schmiediche]

Investment Info:

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

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

My father and I were looking for a multifamily property to invest in and the owner of this property reached out saying that he is interested in selling and he would want to sell the property right next to it as well. Six of the eight units are currently rented out and four of them are over $100 below market rent and the property is still cash flowing 5%. Rents are $2,850 per building and for the next few years we will slowly raise rents to market value and it will be cash flowing 9.19%

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

We were looking for a multifamily property to start our investment journey and bring in residual income.

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

We found the seller from a series of direct mail outs and when he mentioned selling both properties and that he had below market rents we pushed on the fact that he had lower rents and being willing to purchase both properties to negotiate the deal.

How did you finance this deal?

Conventional 30 year fixed, 25% down, with 3.375% Interest

How did you add value to the deal?

No renovations were done and once the leases end we will be raising the rents for greater cashflow

Lessons learned? Challenges?

While we were under contract seven of the eight units were rented out and right after closing we found out that she had moved out. Now we are in a unique situation where we can't rent out the unit because she has an active lease on the property and we can't evict her because of COVID protecting tenants unable to pay rent. It has left us with an unusual situation that we are still trying to figure out with help from other investors and attorneys.

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

Brenda Williams from City Bank Mortgage made the transaction effortless on our end with an amazing interest rate. It was so good that when we sent it to the sellers for proof of financing they reached out to Brenda Directly to verify that the pre-approval letter wasn't a fake.