It is in a very good location and 5 of the 6 units are 2-bed units, which is uncommon for a larger MF in this area (most are all 1-bed units in larger buildings). There is additional opportunity for appreciation based on continued rent repair and further improvements to the building.

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

We wanted to grow our portfolio and add some larger properties.

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

We were working with a realtor on another deal and this was a pocket listing that he was getting ready to post on the MLS and asked if we'd be interested.

How did you finance this deal?

Initially with owner financing (4.75% 30 yr amm with 3 yr balloon, 12% down). We have since refinanced into a commercial loan (4.25% 25 yr amm fixed for 5 yrs) so no longer have to worry about the balloon.

How did you add value to the deal?

We created a plan for rent repair, the seller let tenants know this would be coming which was helpful. We met with each tenant to discuss our plan which developed good relationships and eliminated turnover. The seller removed 2 problem tenants prior to acquisition, allowing us to renovated those units. The appraised value went up to $470,000. We have also targeted insulation projects to mitigate heating costs and make the building more comfortable for tenants.

What was the outcome?

We have a well performing building, solid tenants and continued opportunity for further rent repair and forced appreciation with further improvements to the building (exterior trim painting, new paint and updating flooring and appliances in units with long-term tenants).

Lessons learned? Challenges?

This was our first time exploring seller financing, so negotiating that was interesting. We chose to get a Broker Price Opinion at acquisition. Since we were using a dual agent and this was our first larger multi, it was important for us to have a 3rd party opinion of value even though we did't need a full appraisal. It was a lot of work on-boarding existing tenants but well worth the time to develop those relationships.

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

Yes! Sam Mitchell (Worth Real Estate) was our excellent realtor and we would highly recommend working with him. He was very easy to work with, very communicative, and we felt good about working with him as a dual agent on this deal. the BPO was done by Tim Dutch and was timely and thorough. For the refi we worked with Ben Sprague at First National Bank, always great to work with!