Dutchess County Tri-Plex with 16 Garage Rentals (20% COC)

[Frank Robinson]

Investment Info:

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

Purchase price: $365,000
Cash invested: $120,000

Closed on my first US based deal in June 2019. This included 3 Apartments plus a bonus 16 bay garage with below market rents and high vacancy. No rehab required on my part as full gut rehab was inclusive in purchase. Also started with 100% occupancy on apartments as conditioned by bank financing terms.

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

Multi family is one of the best ways to build wealth and cashflow. After running this deal through my financial analysis the numbers were fantastic. So much so that I got a look at the property the first day on market and had an almost full price offer out same day.

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

I have access to MLS through my agent and my daily ritual is to run a query for new listings in my target areas.

How did you finance this deal?

Utilized community bank offering with Commercial financing and highly favorable terms as property sits in opportunity zone

How did you add value to the deal?

Negotiated renovations into sale leading to 100% occupancy at close. Also updated garages and brought up to 90%+ occupancy. Additionally implemented online leasing and bill payment.

What was the outcome?

Near 100% Occupancy and 20% Cash on Cash. Appraised $85K above purchase which is excluding the additional value created by increasing garage occupancy and raising those rents. Garages were rented at $75.00 a unit where as market is $150-200.

Lessons learned? Challenges?

This deal took much longer to close than anticipated. We had accepted offer in Nov 2019 and didn't close until the June 2020. The big delay was with the renovations which were mismanaged by the Seller. If I am in this situation again I would build in some very specific milestones into the contract to force on time delivery. Also at the end with inspections happening during early phase of Covid some items were missed where i could have gotten seller concessions.