"The stack" begins -- the power of BRRRR got us this deal!

[Meredith Mihm]

Investment Info:

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

Purchase price: $195,000
Cash invested: $39,000

We're about to close on this 6 unit apartment complex. We have owner financing, and we negotiated with the owner to replace the roof as part of the purchase price. All units are a bit under market rent, and we are planning to add a 2 bedroom apartment to the attic ($700), so the cash flow will be $1400 soon, with rents raised a bit. We're also planning to add coin-op laundry in the basement, and possibly large storage lockers.

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

Cash flow, and the bones of this building. I like crappy buildings with good bones. This was a nunnery for the first 60-70 years of its life, and the church took good care of it.

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

My extrovert husband found it, and we negotiated by analyzing the way that purchase price and interest rate can be tweaked to make the same offer look different. We had many possible offers lined up, from 160K to 200K, at varying interest rates. But they were all more or less the same offer, when amortized out over the balloon period!

How did you finance this deal?

Owner is financing. 39K down at 3.9% with a 10 year balloon, amortized over 30 years.

How did you add value to the deal?

Plans: new roof, 7th 2 bedroom unit in attic, light reno. when units turn over.

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

Ray Hughes, our lawyer in Eau Claire, WI, has been amazing, and has walked us through all sorts of things, from negotiating, to contract details. Highly recommend.