First Triplex in the heart of Missoula

Real Estate Deal Analysis & Advice
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First Triplex in the heart of Missoula

Kyle Black
Rental Property Investor · Missoula, MT · Member since 2020 · 7 posts · 3 votes

Investment Info:

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

Purchase price: $385,000
Cash invested: $9,048

A 1,650 sqft triplex containing 3 1bd-1ba units.

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

I travel for work, so house hacking made the most sense for me. I also am at the stage where I would prefer to not have roomates anymore - so I opted to go the multifamily route.

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

Found the deal on Realtor.com. I had looked at several properties already but was beaten out by other buyers offering well above 20k over asking.

The sellers agent said they were reviewing deals as they came along, so I sent in my offer a few hours later and had it accepted the following morning.

How did you finance this deal?

All personal money. Because I am occupying the building, I opted to go the FHA route.

How did you add value to the deal?

Currently adding value. I am in the process of renovating the largest unit. I hope to renovate the other two in the next 18-24 months and then do a HELOC to purchase another building.

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

Michele Hall in Missoula is an absolute rock star. Will be using her for ALL of my deals in Missoula going forward.

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Keith Miller
Developer · Missoula MT · Member since 2016 · 231 posts · 84 votes
5y

Nice Kyle! I remember seeing this one on the MLS. It's a great neighborhood to be investing in, both my houses are in that general area. Doing it as an FHA was a great idea, then you could save your cash for the renovation. Have you already rented out the other two units? If so, what did you end up getting for rent?

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  • Dmitriy Fomichenko
    Solo 401k Expert · Anaheim Hills, CA · Member since 2012 · 18k+ posts · 6k+ votes
    5y

    Nice looking house, congratulations @Kyle Black ! 

    1Reply
  • Keith Miller
    Developer · Missoula MT · Member since 2016 · 231 posts · 84 votes
    5y

    Nice Kyle! I remember seeing this one on the MLS. It's a great neighborhood to be investing in, both my houses are in that general area. Doing it as an FHA was a great idea, then you could save your cash for the renovation. Have you already rented out the other two units? If so, what did you end up getting for rent?

    1Reply
  • Kyle Black
    OP
    Rental Property Investor · Missoula, MT · Member since 2020 · 7 posts · 3 votes
    5y

    Thanks @Dmitriy Fomichenko , been a long time coming.

    @Keith Miller The unit already had long term renters in place. The rents were pretty low, so I set them both to $700.00/mo and moved into the top unit myself. I didn't have the capital to flip all three units at once, so I figured keeping solid renters was more beneficial than raising the rents to true market value and running the risk of getting potential problem renters - especially while I was working out of town.

    0Reply
  • Keith Miller
    Developer · Missoula MT · Member since 2016 · 231 posts · 84 votes
    5y

    Hey Kyle,

    Yeah that makes sense, plus it never feels great to jack up the rent on existing tenants. I'm in the process of renewing a lease with one of my tenants and keeping the rent the same because she's been great. 

    Once you've renovated it the HELOC is a great choice, my mortgages are also owner-occupied, so it usually makes sense to keep that mortgage in place and use a HELOC to access the equity.

    Good luck with the renovation! Are you doing it yourself or hiring it out?

    1Reply
  • Martin Judnich
    Attorney · Missoula, MT · Member since 2021 · 4 posts · 3 votes
    4y

    Nice work on this one

    1Reply
  • Sam Domach
    Investor · Milwaukee, WI · Member since 2014 · 29 posts · 17 votes
    4y

    @Kyle Black Well done Kyle! Great to see and will be nice to see the cash flow after the repairs.

    One note: be careful with the HELOC for your next property. It always sounds like a great idea, but there are downsides. If you plan to hold the next house for the long haul, I would avoid a HELOC and look into a cash out refinance. If you are looking to flip or something in the short term, the HELOC can be the right move.

    Awesome work!

    1Reply
  • Kyle Black
    OP
    Rental Property Investor · Missoula, MT · Member since 2020 · 7 posts · 3 votes
    4y

    @Sam Domach Right on. I appreciate that insight on the cash-out refinance as opposed to heloc. Perhaps I was thinking they are more similar than they are - I will make sure to dig into that before I cross the bridge.

     I am on the home stretch of renovations for the largest unit and you're right, it will definitely be nice to see the returns after the renovations. Hoping to have it up and running by December.

    0Reply
  • Kyle Black
    OP
    Rental Property Investor · Missoula, MT · Member since 2020 · 7 posts · 3 votes
    4y
    Originally posted by @Martin Judnich:

    Nice work on this one

    Thanks Martin!

    0Reply
  • Keith Miller
    Developer · Missoula MT · Member since 2016 · 231 posts · 84 votes
    4y

    Good call Sam. I've actually just finished up using both. About two years ago, I got a $70K HELOC on my primary residence, to put a down-payment on my backyard townhouses. Then, I just finished a cash-out refi of $165K. I'm only walking away with $97K though, because the first thing the bank did was pay off my HELOC. So you can mix and match, but with the rising interest rates, I'd lean a bit towards a refi. It all depends on what your goals are though.

    0Reply
  • Danielle Jackson
    Phoenix, AZ · Member since 2021 · 504 posts · 282 votes
    4y

    @Kyle Black Congratulations on your first investment!

    Agree with @Sam Domach on the HELOC vs. cash-out refi. Holding period is key for the type of financing you secure.

    0Reply
  • Kyle Black
    OP
    Rental Property Investor · Missoula, MT · Member since 2020 · 7 posts · 3 votes
    4y

    Quick update on the unit.

    Finished renovating the biggest unit and ran it as an air bnb this past summer. It averaged $3,508/mo gross over the 6 month touring season and have renters moving in for the next 6 months at $1,825/mo furnished. 

    The 2 smaller units both received a face lift with a fresh coat of paint, new hardware, and new counter tops and both rent for $900/each.

    After all the renovations, the estimated ARV is currently sitting at $550k-$570k.

    It was a fun learning experience for my first one. Thanks everyone for your insight! Here are some before/after pictures.

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