First Commerical RE Purchase - 11 Unit Apartment Building

[Sam Domach]

Investment Info:

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

Purchase price: $635,000
Cash invested: $127,000

I was able to secure an off-market 11-unit apartment building in the Greater Milwaukee Area. The building is fully rented out and has a property manager currently living on site.

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

The stacking method. I first purchased a duplex, then a triplex and was looking for something a little bigger with the current rates and outlook.

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

I found this deal off-market through a family friend. I negotiated based off the ROI that this property would net post all expenses.

How did you finance this deal?

I financed this deal through a local Credit Union. Was able to get a 3.75% 5 year term amortized over 25 years with a 20% down payment.

How did you add value to the deal?

Through the purchase and negotiating with the seller based on the inspection, the electrical will be redone and the roof will be redone.

What was the outcome?

The outcome is I now own the 11-unit apartment building and its cash flow :)

Lessons learned? Challenges?

This was my first time dealing with Commercial Lending, which is a whole different animal than residential lending. I called 20+ banks, from large institutions to smaller, local banks. I found that by far, the smaller local banks and especially credit unions, were able to provide the best financing available. 3.75% is a great rate for a residential property, let alone a 11 unit and they were flexible on the down payment which is less money out of my pocket.

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

I bought it off market, so I did not use an Agent which was another first for me.

[Sam Domach]

@Pete Woelfel Thank you!

They do most of the maintenance themselves, other than something that I would want an actual contractor to come out and do. I currently have it set up as a rent reduction and then they will fill out a 1099 at the end of the year for tax purposes.