Great success in real estate

[Julian Sanchez]

Investment Info:

Large multi-family (5+ units) commercial investment investment in Decatur.

Purchase price: $150,000
Cash invested: $75,000

Contributors:
Andres Duarte

My first deal: went all in. Out of state, heavy rehab, almost fully vacant, rough area…
We made lots of mistakes in hiring the wrong contractors (now we’re pros’ at this part), had issues with city inspectors, one of the coldest winters on record and trouble finding the right lender for the constructions costs (we later got a local lender here in south Florida to trust us with a hard money loan $225k) 7 months of rehab. Finally, we were able to cash out refinance with a lender out of California

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

Great price and just what we were looking for. I wanted to start investing in commercial multifamily from the beginning

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

Trulia... local residential agent did not know anywhere else to market it

How did you finance this deal?

cash purchase, all my life savings up until that point; went all in.
We then got a 225k hard money loan at a 12% interest rate to do the rehab

How did you add value to the deal?

gave $500 bucks to the existing 5 tenants to leave.
We then proceeded with full demo and trash out of the whole building, intensive pest treatment, new roof by contractor who faked a license and lied to us...
tear out of that roof and new one by an actual roofing company, all brand new AC units, new flooring on the entire building, paint and new bathrooms. exterior landscaping, siding and paint done.
All 16 units then filled with tenants at average $800/mo

What was the outcome?

Appraisal came back at 1.1M, we were all in for close to 400k cash out refinance at 75%,
we created 700k of equity after it was all said in done...

Lessons learned? Challenges?

Remember the fake roofer? well, making sure he had insurance was the one thing we did right!
we submitted a claim when a large thunderstorm flooded the entire third floor the very next day his work was done.
The insurance came out and look at all the damage done.
Many months later after we thought it was a lost they came back and approved our claim, in the end we received a check for a lot more than the damages incurred :)