Investment Info:
Large multi-family (5+ units) buy & hold investment.
Purchase price: $2,175,000
Cash invested: $2,175,000
Our most recent purchase consists of seven four-plex, and an additional 2 acres zoned multifamily. Property was mismanaged for 12 years and is in need of major repairs, 30,000 sf of parking lot to asphalt overlay, 8 damaged sewer lines, on and on. There were 6 vacancies at closing, and we are in the process of remodeling those units. We bought the property because of the location and the value.
What made you interested in investing in this type of deal?
The progression and growth of our company is what brought us to the place of seeking to purchase a larger complex. We've made several offers on larger properties (40+ doors) but always lost. We redefined our search criteria, lowering the number of doors and started looking at more tertiary markets, with the thought of minimizing our debt and purchasing a couple of properties.
How did you find this deal and how did you negotiate it?
My wife found the listing as I was weeding through 130-ish COSTAR leads, that yielded 5 leased worthy of underwriting. Of the 5, there were 3 that made hit the mark, this was the most desirable and I was aggressive. After we were in contract and in process of DD I circled back and renegotiated, not once but three times. I was polite but very firm and upfront. The end result, we'll be under the sellers asking price even with our CAPEX.
How did you finance this deal?
Cash
How did you add value to the deal?
The value was in the purchase price.
What was the outcome?
The outcome? The end of a matter is better than its beginning, and patience is better than pride. Ecclesiastes 7:8
Lessons learned? Challenges?
If you don't know, ask. If you think you know, ask. If it sounds funny or off, ask. Walk every unit even if you have an inspector. If you hire an inspector, don't use their person to scope the sewer, find a local reputable plumber, they may know the history of the area and or the building.
Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?
We hired an agent to represent us, however I was more active and determined in the purchase than my agent. Had I followed his lead we would've paid asking price. I wouldn't recommend the agent I'd used.
