4plex on Summer Street

[Michael Walker]

Investment Info:

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

Purchase price: $165,000
Cash invested: $1,000

4 unit with two 2 bedroom 1bath, and two 1 bedroom 1bath.

Purchased this through a direct mailer and from afar and without with property manager. Inherited four tenants all with month-to-month leases with $2450 gross rent. Was able to immediately raise rent to gross $3,000. Will rehab and upgrade units as they become available justifying further increased rents.

Don't have a full year of numbers yet, but expect to cash flow to be between $400-700 a month.

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

A 4plex in this area of Augusta was appetizing and thought the cash flow made sense. And although the building is old it has been kept in really good condition!

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

Found this deal through a Direct Mail Marketing Campaign. I negotiated the deal entirely through email.

How did you finance this deal?

Traditional financing.

How did you add value to the deal?

The rents were entirely under market with the units in fair condition. There is room for upgrading the units to demand higher rents as well. The upgrades are mostly easy stuff like flooring, paint, updated bathroom that should have a good ROI.

What was the outcome?

Got the property and things are moving! I caved and found a property manager to handle all the tenants. Together we're working on a rehab plan as a unit just became available.

Lessons learned? Challenges?

Was probably too anxious to get this deal. I'm happy with the purchase price (10k below appraisal) but I think I could have negotiated better. Also I tried to property manage from afar for the first three months and this took up a ton of my time.

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

I worked with Bangor Savings and would recommend them in a heart beat.