Follow my journey tracking progress on multi family #5. This thread will discuss the steps I have/will take to make my most recent real estate acquisition successful.
Let me get you up to speed. Here's what's happened so far:
- got a call from a broker that had an off market deal in the Fort Hill section of Roxbury (Boston) which was steps to the orange line and less than three miles to down town.
- existing 3-family brownstone with a large walk out basement which was partially finished. Owner asking $950k. 3,800 gross square footage.
- told the broker to set up a walk through and I asked my long time general contractor to meet me there to identify any deal breakers. On my renovation projects I typically gut the entire building down to the studs so I am looking for really big items (e.g. foundation falling apart, pervasive insect damage,etc.).
- the building had been sitting vacant for nearly a year. Lots of water damage, super ugly, terrible floor plan, junk from previous tenants everywhere. In other words...EXACTLY WHAT I LOOK FOR! Value!
--I run Numbers with my contractor on the sidewalk. He is thinking around $525-550k in Reno costs (excluding appliances, attorney/architect fees, and building permit).
- put in an offer at $875k. I would pay asking but figured I'd give it a shot. Ended up being another offer at full asking of $950, so I bumped my offer to $960. My broker had a relationship with the seller so that was enough to get it done.
-- called my bank the next day and told them what I wanted to do. Four 950 square foot units; 3- beds, 2-baths. Total gut job. High end looking remodel. 600k in total projected renovations which they would finance. I am a pretty good customer of theirs with nearly >$3 million of outstandings with them and have a track record of success. Within a week I had approval for a $720k loan for purchase and $600k in financing for renovations, pending the appraisal.
--$3000-$3300 per unit per month. 12-13k total rent per month. Total free cash flow of 4-5k per month.
-- got as-built plans from the previous owner and started marking them up in Microsoft Paint to show an optimized floor plan. Called up my architect and let him know that he has another job bringing my vision to life. I'll have a separate post on how we came to the current floor plan.
-- bank ordered the appraisal. Needed to come back at just under $1.8 million to get what I wanted from the bank. Researched comps and put together a excel spreadsheet to give to the appraiser which maps to that $1.8 million valuation.
-- engaged a zoning attorney to help me with the variances needed to do what I want to do with the property.
-- appraisal came back today...$1.8 mil. Bam! We are off to the races. Close end of September. I am pumped. Another deal closer to retirement.
