Investment Info:
Duplex buy & hold investment for University of Dayton (UD) students.
Purchase price: $225,000
Cash invested: $60,000
UD student rental (8 bed / 5 bath) located in the off-campus student housing Mega Block. No occupancy at the time of purchase due to a rehab, completed by the seller, after water damage from a pipe bursting. Expected high cashflow margin with equity upside long-term through potential University of Dayton acquisition.
Conservatively estimating $1,500/mo in cashflow. Students get a discount over on-campus room & board and the property cashflows well!
What made you interested in investing in this type of deal?
Originally when this property first hit the market, it went under contract very fast. Our team felt we had missed an opportunity, even though we just finished closing deal #1. When it came back on the market, our team sprung into action quickly and got it under contract the day after it re-listed! The cashflow and long-term potential for University of Dayton acquisition was too good to pass up!
How did you find this deal and how did you negotiate it?
Using an MLS search our outstanding agent (Casey Hartman) setup for us, along with Redfin and other listing sites. Casey, also helped negotiate $10k from the seller for minor maintenance and COVID-19 vacancy impacts.
How did you finance this deal?
Personal savings, a little bit of a stretch this time (worth the squeeze). Looking forward to exploring other financing options for the next deal.
How did you add value to the deal?
Value-add for this property will be realized in the down-stream effects when it's filled with students who pass the house down to successors, yielding a sustainable long-term student rental model. This model was built through personal connections with current students. The cherry on-top is the professional and conservative nature of the student group, which is expected to drive lower maintenance costs than your average college student!
What was the outcome?
Closing on a vacant property, after the "Stay at Home" order was issued for Ohio. Luckily, expenses are low and the negotiated cash at closing can carry the property for 4mo (start of next school year)!
COVID-19 is forcing some unique tenant solutions. Compared to the initial vision of filling the property with summer school students on short term leases and then annual leases for students at the beginning of the next school year. Our team is currently evaluating other options as a stop-gap (traveling nurses, small family, etc.).
Long-term the value of this property will overshadow the minor bumps our team perseveres through due to COVID-19 impacts.
Lessons learned? Challenges?
From contract to closing, this property was MUCH smoother than our team's first property! We cut our teeth early with a difficult closing on property #1, and it made closing this gem that much easier! However, we did have to contend with the COVID-19 Pandemic...
Once under contract and observing the COVID-19 impacts unfold, our team considered finding a way to mitigate the property vacancy as a contingency to continue with closing. The result was $10k at closing from the seller, which will cover minor maintenance and expenses until the next school year (Aug 2020). The seller was incentivized to sell given the uncertain increasing impacts of the COVID-19 Pandemic, and the property still made sense as a long-term cash flowing asset with an upside for university acquisition. A win-win!
Consider the seller's position when negotiating terms, it may unlock some possibilities that lead to a beneficial scenario for both parties.
Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?
Casey Hartman (Glasshouse Realty, Dayton, OH) is our spectacular agent! We could NOT have closed this deal without her! She navigates deals with professionalism and poise. Her understanding of the market and investor considerations puts her in the elite agent class. Can't wait to close more deals with Casey!
Paul Sushereba (NFM Lending, Beavercreek, OH) is an incredible lender with the right expertise on the mortagage/lending process. He guided the entire team through closing during COVID-19!
Closing during COVID-19 would not have been so smooth without Casey and Paul!
