Updated almost 5 years ago on . Most recent reply
Second Investment Duplex
Investment Info:
Small multi-family (2-4 units) buy & hold investment in Bay View.
Purchase price: $213,750
Cash invested: $52,643
Interesting deal. The property came with an extra lot of land. I was able to sell the additional lot for $28,000 and use a 1031 exchange to purchase another single family a few weeks after the lot had sold.
What made you interested in investing in this type of deal?
Great location with generally high rents. The rents received from the property were lower than the neighborhood average. People avoided the property because of some foundation wall bowing and because the active tenants had some issues.
How did you find this deal and how did you negotiate it?
I negotiated that I wanted the foundation repaired per the engineer report prior to close. I started with a lower offer because the home had been on the market for about 9 months. The purchase price was great though, especially with the extra lot of land.
How did you finance this deal?
Conventional
How did you add value to the deal?
After the property closed, one tenant immediately stopped paying and had to be evicted. I had her evicted, then went into her unit, made some minor upgrades and purchased new appliances. I then resisted the property for $350 above what the previous tenant was paying.
What was the outcome?
The outcome of the deal has been great. I have a cash flowing property in a great location.
Lessons learned? Challenges?
Existing tenants can be a major barrier to entry for most investors. Just because the current tenants seem like a nightmare and might have to be evicted, it shouldn't change your desire for the property. You might acquire the property for a much better deal as a result. That being said, evictions are definitely something I like to avoid at all costs.