5th buy & hold property a 3 unit in Maine

[Carl Hebert]

Investment Info:

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

Purchase price: $62,500
Cash invested: $54,000

3 unit, all two bedrooms, one bath.

This building had a fire and the 1st and 2nd floor were empty. Both units needed a full remodel and we did this over two years 2018-2019. We also worked with the state of Maine and the city of Auburn to get grants and loans to help with the building. We ended up getting money from the city for plumbing and money from the state for siding, porches and some interior work that was associated with lead removal.

The building has a couple of small projects left to do, but is basically a brand new building now. All new windows, siding, roof, porches, electric, plumbing, driveway and doors.

All the units have been remodeled and are fully rented.

Currently cash flows at $1100 a month on rents of $2550 monthly.

Last appraisal was $202K

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

Was looking to build my portfolio and this was a building I was already familiar with.

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

Friend of mine had this and three other properties with three partners and they were looking to sell. I offered 125k for two buildings and they accepted.

How did you finance this deal?

This was our first owners finance. 10 years at 4%. We ended up rolling this into a larger loan when we refinanced the portfolio.

How did you add value to the deal?

Tons of work, pretty much everything was redone new.

What was the outcome?

A great building that looks brand new. Appraised in 2020 for $202k

Lessons learned? Challenges?

Working with the city and state government to get grants and loans for work to be done was excruciatingly slow. Took over a year to get the outside work done after we started the process with the state. Worth it now, but some folks would not be able to wait that long. It took so long we lost our insurance and had to get a more expensive policy while we were waiting.