5th deal down using 1031

[Corey Louton]

Investment Info:

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

Purchase price: $135,000
Cash invested: $24,000

Picked up this triplex with a 1031 exchange, property is at 100% economic occupancy, bringing in $2200 a month in rents. The property needed some TLC to bring it back to life, but we have a good team that is doing just that.

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

Found it on mls first day it was listed. Owner had just passed away and their estate was selling it at bargain pricing. To be competitive we waived inspection contingencies, offered $10k more than asking and negotiated certain repairs to be done following closing to follow local code enforcement.

How did you finance this deal?

We used Civic Financial services, a private lending firm for the debt. The down payment came from a 1031 exchange.

How did you add value to the deal?

Immediately raised rents by $50 each unit and transferred utilities into the tenants names. We utilized the money from negotiated repairs to increase the value of the property as well.

What was the outcome?

Repairs are still being completed as the list was lengthy, but all tenants are happy with the repairs being done and are enjoying the new management.

Lessons learned? Challenges?

Looking for a replacement property during a 1031 exchange the current market was especially challenging. 45 days sounds like plenty but it went fast and we went under contract 3 days before the expiration of the 45 day period.

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

Worked with Dave Foster and his team at Exchange Resource Group. They are a team of true professionals and I won’t hesitate to call on them next time I have a 1031.