4608/4610 Adams Street - Stinky = Money

[Wade Bartels]

Investment Info:

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

Purchase price: $180,000
Cash invested: $60,000

I got this deal in my office because an older agent was talking about how she couldn't even go into the property because the mold and cockroaches. I got her to agree to let me into the property that day and I brought her an offer. I knew I'd make my real estate commission on it too so the numbers worked well. After closing I fully renovated both sides and treated the cockroaches. This was by far the smelliest dirtiest grossest house I'd ever seen but it cleaned up beautifully. Now I have it fully rented and refinanced with most of my money back out of it ready for the next project.

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

I'm trying to grow into multi-family and this was my first opportunity. In this market, an off market value-add property is the best way to build equity.

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

I found it through another agent at my market. She had paperwork to list it but she let me buy it before going live to the open market. I made an offer that made sense and they countered. I really pushed hard on the condition and they agreed to take less.

How did you finance this deal?

I used a local portfolio lender to finance with 20% down and a 6 month interest only period. In hindsight I wish I would have used a construction loan but once I refinanced 8 months later I was able to pull the cash out the same way.

How did you add value to the deal?

A total rehab of both units.

What was the outcome?

Fully rented both sides, fully renovated property cash flowing over $1300 per month.

Lessons learned? Challenges?

I should have done a better job conserving cash in the financing of the property. I used at least $96,000 to get the property purchased and renovated and I didn't reclaim that until months down the line when I refinanced.

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

I was the agent, New Era Construction ran most of the rehab for me with some other sub-contractors that I hired for plumbing, electrical, paint, landscaping. 402 Title services closed the loan and they do a great job for my other clients too.