Solid block and brick 3 unit, freestanding building. Commercially zoned. All 1 bedroom, 1 bathroom units. 2 units have laundry in them. All units are recently updated/remodeled. All units have HVAC (central air w/ heat pump) units less than 4 years old, upgrades galore including tile floors, recessed lighting, and all appliances included. Off-street parking for all tenants.

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

I managed this property for 7 years before I purchased it from the previous owner. The property already had amazing long-term tenants that I placed.

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

I previously managed this property for the seller. When she decided to start selling off her vast portfolio she promised me first dibs at this property.

How did you finance this deal?

I took out a business real estate loan with a local credit union. The loan term is 10 years at a fixed rate, amortized for 25 years. I put 20% cash down and paid the closing costs cash as well. My property appraised for $110,000 more than I paid for it - so I had instant equity of $137,000 at closing.
Fast forward a year and a half and my property is now estimated to be worth $315,000!!

How did you add value to the deal?

I manage this property myself and since I am handy, most repairs and maintenance are done by me.

What was the outcome?

Amazing tenants - never any issues. Next to no maintenance required since acquisition.

Lessons learned? Challenges?

I always get 1st months rent, last months rent and security deposit at lease signing. No exceptions, ever.

My advice: Never rent to family or friends.

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

Phil Fry - commercial loan officer at Diamond Credit Union, Reading, PA

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