All Forum Posts by: Deepak Malhotra

Quote from @Jeremy H.:

I feel like there is a missing part to this story...

How long did you own the property?

Did it cashflow? Property management problems? CapEx problems? Tenant problems?

I did one house I may end up taking a small loss on, we'll see. Purchased a little too high at the buy (I knew it at the time too), does a little better than breaking even on cashflow, and took too long to rehab. Turned out to be a lesson learned more than anything. 

One year.

It was completely empty when I bought it.  A property manager's son occupied one of the units.  The management company stopped sending statements and stopped paying me rent at some point.  So, no, during the year I owned it, it did not cash flow.  If I would have used competent management, the manager that I picked and vetted, then it would have cash flowed, assuming they could have filled the vacancies.

The big lesson I learned is that the property manager selected can make or break a deal.  Anyone can go and figure out good areas, some can figure out good deals, but don't trust others to pick a management company for you.

Quote from @Ryan Kelly:

@Deepak Malhotra based on your sales price, I assume this was also sold many years ago. Fourplexes in Georgetown today easily top $600,000+. 

Yes, this system does have me put in dates but then it doesn't seem to show them easily.  At least not in the place where people are commenting.

Investment Info:

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

Purchase price: $199,900
Sale price: $212,000

Fourplex north of Austin. It turned out to be a bit too far.

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

Austin was appreciating faster than non-tech cities.

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

I sent a friend down there to look at various listings. I believe that there were four fourclosures in a row. This was in 2004.

How did you finance this deal?

Conventional non-owner occupied. 25% down.

What was the outcome?

What a disaster this deal was. I was happy to exit quickly without losing too much.

Lessons learned? Challenges?

I had found and vetted a great property manager. I sent a friend down there and he met a property manager on the plane and, I think, took a shine to her. He hired her on my behalf and I was quite surprised. I was just starting in 2005 and didn't have the heart to veto him. Well, that property manager wasn't so great. They put their son in one of my units. They eventually declared bankruptcy. I was originally thinking about purchasing all four but am so glad I started small with one.

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $140,000 in Nov. 2005
Sale price: $175,000 in July 2007

1872 square foot single family home with no garage. Nice floorplan and quiet cul de sac. Rented for about $725 per month way back then.

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

It was close to home and near the university. I also realized that I don't have to pay any utilities at all with single family homes. If utility prices go up, my cash flow doesn't go down.

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

MLS. Standard offer process.

How did you finance this deal?

Conventional non-owner occupied loan. 20% down.

What was the outcome?

Sold at a profit in a bidding war.

Lessons learned? Challenges?

Years when there are bidding wars are good years to sell.  But should have held it longer.  Hindsight is 20/20.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Cheney Realty, Inc. https://buygeg.com/

Quote from @Nicholas Zaharevich:

@Deepak Malhotra When did you sell this property? 218K seems a little low for the area. Also, for your shared laundry situation, I recommend PayRange. It allows tenants to use their phone rather than quarters. I have a 4-plex in Kennewick and use PayRange. I haven't eliminated the abilit to use quarters, but I only need to empty the machines 2-3 times a year. 

2005.  I'm slow at inputting previous deals.  I try to input a new one every now and then.  Good tip on Payrange.  I don't think it existing back then, though.  Also, the quarters didn't cover the expenses, is my recollection.

Quote from @Isadore Nelson:

180k + 40k, sold for a 'profit' at 218k?

Not plus 40k.  40k down payment.  That was the question in the form unless I was mistaken.

Investment Info:

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

Purchase price: $180,000
Cash invested: $40,000
Sale price: $218,350

Fourplex in Kennewick. Located after a letter writing campaign and purchased directly from the seller without a real estate agent. Seller used one of the units for storage. I turned it back into a residential rental unit.

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

A nearby city with a lot of highly paid engineers. The rent versus price seemed good. An agent sent me a video tape of a fourplex in this area that made it seem pretty good. The area had appreciated substantially in a short amount of time. I wrote letters to owners and found someone willing to make me a great deal.

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

I wrote letters to owners and found someone willing to make me a great deal. Negotiated over the phone and I sent an offer using my own form.

How did you finance this deal?

Commercial.

How did you add value to the deal?

One of the units was being used as storage. I installed cabinets, painted it, and made it back into a residential rental unit.

What was the outcome?

Sold at a profit.

Lessons learned? Challenges?

Shared laundry meant a fifth utility meter and high water costs that I paid. Collecting quarters wasn't worth it. Decided I never wanted a shared laundry again.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Wheatland Bank was good to me but the lender I worked with has since retired. Bought by letter writing campaign. www.buygeg.com

Investment Info:

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

Purchase price: $99,000
Cash invested: $19,800
Sale price: $136,000

Upstairs/Downstairs split entry duplex in Cheney, WA, home of Eastern Washington University. One of two adjacent identical duplexes. Each unit is 2 bedroom, 1 bath and has a fireplace. The duplex had carports and separate fenced backyard areas. Sold to a friend.

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

Decent cash flow. Rents were $575 per unit at time of purchase.

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

MLS.

How did you finance this deal?

Conventional 20% down.

What was the outcome?

Sold to a friend.

Lessons learned? Challenges?

I shouldn't have been in a hurry to sell just to release a bit of equity. Cap rate was still decent when I sold it, even at its updated value, versus alternatives.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Cheney Realty was the agency at purchase. The lender was great for me, Washington Mutual Bank, but is no longer around.

Investment Info:

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

Purchase price: $99,000
Cash invested: $19,800
Sale price: $136,000

Upstairs/Downstairs split entry duplex in Cheney, WA, home of Eastern Washington University. One of two adjacent identical duplexes. Each unit is 2 bedroom, 1 bath. The duplex had carports and separate fenced backyard areas. Sold to a friend.

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

Decent cash flow. Initial rent was $575 per side.

How did you finance this deal?

Conventional 20% down.

What was the outcome?

Sold at a profit.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Acted as my own agent when selling, Deepak Malhotra, Cheney Realty, Inc. www.buygeg.com

Quote from @Kerry Baird:

@Deepak Malhotra and @Pat Heidingsfelder
Can you please give some data points? What DTI do they go up to, do you have to make a big draw, what is the length of time you can draw and the length of time to pay back? What do they need for the LLC? Operating Agreement is probable, but do they need tax returns?

I just discovered they operate in Florida and Texas, where we have properties, so I am very interested in using them.  Thank you!

After I filled out their paperwork, they ghosted me.  Whenever any banker sees my list of properties they often get overwhelmed, unless I'm looking for a commercial loan.