Duplex with good cash flow, but high hassle

[Matthew Osborne]

Investment Info:

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

Purchase price: $62,000
Cash invested: $5,200
Sale price: $95,000

2 units that had a possibility to be 3 units if could get approval from the city. It was unfortunately a high hassle property due to poor property managers. It cash flowed well at just under $1000. Held this for just over a year. Using the capital from the sale to develop a 4 unit short-term rental in a much better neighborhood.

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

This was part of a syndication. I personally was not excited about the numbers that this property had but it was a great learning experience on what I do not want to own.

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

This was an off-market deal.

How did you finance this deal?

This was with a private capital loan

How did you add value to the deal?

The property was vacant for just over a year. It needed lipstick on the 1st unit Bath and kitchen. The 2 unit needed a shower and bath remodel.

What was the outcome?

Not much profit but was not a loser. The learning experience was worth it.

Lessons learned? Challenges?

Depends on your mentality of being a landlord. This particular property and location was a high hassle with tenants and poor property managers. This was a long-distance investment. While this could have been kept in the portfolio with sourcing better management, there were other properties that were owned that the capital would be better used on for us.