BP wants me to share my first property apparently so...

[Patrick Echlin]

Investment Info:

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

Purchase price: $210,000

5 units in two buildings on the same parcel, plus a 6th that needs about $25k worth of work to make it good, per contractor

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

I found this through my realtor (before I became licensed) and the MLS. List price was $235k, but I thought the numbers looked better (10% cap) at 210.

How did you finance this deal?

Traditional mortgage - 20% down, minus the 10k the bank allowed for repairs.

How did you add value to the deal?

I'm at the tail end of making sure basements aren't flooding, roofs aren't leaking, and everything actually works the way it's supposed to. Once that is done, I'll move on to renovating unit 6, which will be a full gut and redo.

What was the outcome?

TBD

Lessons learned? Challenges?

I haven't learned any hard lessons yet, but I learned a LOT of hard lessons starting a couple of non-real estate businesses.

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

My now-brokerage (Jones Chance & Co. in Ypsilanti, MI) specializes in helping people make wise investment decisions. I joined them to learn more of the nuts and bolts and to help others get on the multifamily path.

[Patrick Echlin]

Originally posted by @Sam Wilson:

@Patrick Echlin - Congrats!!  and Welome to BP!

Thanks for taking the time to share all of that!

I have a couple of questions for you:

1.  I looked up both Ypsilanti and Litchfield, MI on google maps and it said they were about an hour to an hour and a half apart.  I was wondering if you had an inital radius you were wanting to purchase in or certain cities, like Litchfield?

2.  I know from years of working with contractors that some of the challenges with remodels is simply making sure contractors show up and do what they are supposed to do.  Has this been a challenge for you since you aren't in the same city?

3. Also as a business owner, I'm always curious when people post about business lessons learned! Could you please share more details about that? Was it still connected to your REI?

Thanks again for sharing!  Look forward to hearing how it all turns out!

Hi Sam, hopefully I can answer all your questions in a way that makes sense :-)

1. I was looking for just about anything with numbers that worked in terms of what I could afford, cap rate, and cash flowing from day 1. I wanted to be within 2 hours because I'm managing the property myself for now. Once I get a little more comfortable with what all goes in to property management, I'll probably let a professional company do it.

2. All of the repairs so far have been on units with tenants in place, so they usually report back whether things are fixed. It is a little bit of a headache wrangling contractors. When we start the full-gut redo of the 6th unit (which "should" take about a month) I'll probably visit once a week to make sure things are going well.

3. I co-own a microbrewery and the buildout involved removing everything (including concrete floors) and installing all new floors, plumbing, electrical, hvac, etc. We dealt with a dozen or so contractors and subcontractors, nevermind all of the interested regulators (feds, state, county, city) so I got a healthy dose of understanding code, zoning, and contractor... relations.