First Multi Family Rental Under Contract

[Malcolm Grundy]

Investment Info:

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

Purchase price: $137,000
Cash invested: $25,000

2 single family units on the same lot, with a detached garage. Smaller bungalow is currently occupied. Main house in the front needs some rehab, including sewer line replacement. Current owners are negotiating the reduction amounts to counter the repair costs

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

I want multifamily for cash flow and to learn how to scale to larger multi family deals

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

MLS. My agent is familiar with the selling agent.

How did you finance this deal?

Conventional financing with 25% down. I used a PLOC with a local credit union to finance the DP.

How did you add value to the deal?

We will be rehabbing the front house. The current tenant in the bungalow should cover the majority of the initial mortgage to help offset holding costs until the rehab is complete. We will also do minor repairs to the garage to create an additional stream of income

What was the outcome?

still in progress

Lessons learned? Challenges?

sewer lines, electrical panel, roof, and plumbing......all things that would have made me run away from this property. Now i realize all those "issues" are negotiating tools to improve the deal before we get to improve the property.

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

Julie Thorngren via David Ounanian's team with Keller Williams here in St. Louis

[Malcolm Grundy]

Originally posted by @Alexi Schreier:

@Malcolm Grundy nice job! Sounds like an exciting project. I did the same on my first deal, the roof hod some fire damage that I discovered during the inspection and the seller agreed to pay for it.

Are you asking for a credit from the seller at closing? lowering the purchase price? How are you negotiating?

 We asked for seller credits on the purchase price.  As crazy as it may sound, i want to coordinate the repairs to gain the experience. We
used a simple "never split the difference" tactic by asking for more than what we want to achieve from the negotiation.  if we split the difference, it should land at or above my target number.  i think Brandon Turner talked about this on a recent podcast as well, relating it to his monopoly strategy.