Investment Info:
Large multi-family (5+ units) buy & hold investment.
Purchase price: $315,000
Items to Note:
*Mom/Pop owned and operated
*Rents severely under market
*We have turned over 3 units since ownership ($450 rents jumped to $650, plus water/sewer bill back)
*Finishing up our first unit upgrade (Everything New), hope to get a $150 premium. Have a list of prospects waiting for it be finished.
What made you interested in investing in this type of deal?
Growing up poor, I had never even thought about owning anything. I was lucky enough to become close friends with an experienced investor ($30mil plus in personally owned multifamily) who took me under his wing and walked me through the process and opened my eyes to the possibilities that you don't need to come from money to make money. I have spent the last 5 years picking his brain any chance that I could and that lite the fire under to me to start growing legacy wealth, through multifamily.
How did you find this deal and how did you negotiate it?
Found the deal through loopnet. It is located in a secondary market that a lot of people try to avoid. Luckily I was familiar with that market (I was regional manager of a 180 unit community there) and knew right away where the rents should be and how we could get them there. The owners were mom and pop and they were present on our 1st tour. We let them talk about how hard it was for them, let them express their pain points. We offered right away and was under contract within 4 hours.
How did you finance this deal?
Conventional financing at 20% down.
How did you add value to the deal?
We still own and are going through our Value-Add processes right now.
*Replacing Windows
*Replacing Front and Rear Entry door
*Remodeling units
*Improving operations at all levels.
*Water/Sewer bill back via RUBS
*Website to allow tenants to pay rent online and do online work orders
What was the outcome?
In the process currently. So far we have been able to do 3 standard turns and raise the rents from $450 to $650, plus water/sewer bill back. Finishing up our first full upgrade (New Everything) and are going to attach a $150 premium to the apartment. We have been marketing it and letting prospects know the new rates, and we have a list of 4 people who want it as soon as it is done. Getting ready to start our 2nd and 3rd unit upgrades.
Lessons learned? Challenges?
The only challenge or annoyance really is the distance. I live in Greenwood, my partner in Mooresville and the Property is in New Castle. We have been able to overcome this by being very detailed and prepared for our "To-Do" list when we go out there in order to maximize our time.
Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?
We used Dean Murphy, Fairway Commercial, to handle our lending. He has been amazing and is open to a lot of different financing options. I have a relationship with him and have referred several of my 3rd party clients to him.
