Our first Investment Property!

[Andrew Morales]

Investment Info:

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

Purchase price: $692,000
Cash invested: $7,700

After months of searching, backing out of a bad deal, and several lost bids, we finally found and bought a legal multi-family that meets nearly all of our search criteria. We financed the DP with a HELOC at 3.0% and the remainder with a conventional loan at 3.5%. Come springtime, we'll convert the property from a triplex with a DCR of 1.46 to a quad with a DCR of 1.83. Meanwhile, the appraisal came back at 700k giving us instant equity!

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

It was fully leased up at the time of our offer.

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

Zillow. Our offer contained a condition that we would increase our offer by 5k above their next best offer up to a certain amount.

How did you finance this deal?

HELOC for the DP and Conventional for the rest.

How did you add value to the deal?

Still too early but we plan to convert lawn to gravel that can be used for parking, adding a BBQ area, and setting up fiberoptic internet. Each should reduce costs on the property and add value for our tenants.

What was the outcome?

Ten days after the deal close, we've made back all of our cash investment.

Lessons learned? Challenges?

Finding the right property at the right price. We were making offers 30k over asking price but were consistently being outbid. The difference with this property is that we had our bid in within a couple hours that it hit the market largely because we knew exactly what we were looking for and what numbers would meet our criteria.