All Forum Posts by: Michael Ronn

Lesson Number 2: Just because you are told the units are all 2b/1 ba doesn't mean they are.  Purchasing from overseas, I made my offer based on the advertised info and, believe it or not, did not uncover that 2 of the units were just 1b/ 1ba until after due diligence.  An uncomfortable conversation with my realtor ensued and then we worked a plan with the seller (who claimed to not know this fact either) to reduce the purchase price by $4k.  This was a minimal concession, but I still thought the deal was good enough that i didn't want to walk away and let someone else have it.  I will never make that mistake again.

I wanted to post a few lessons learned on this, my first multi-family property (MFP) deal.  

Lesson Number 1: You have to pick up the phone and make phone calls (or at the very least an initial text that leads to a phone call).  I had quibbled for months with wanting to jump into the pool and make an offer on a MFP, but, because I had never done it before, I just let the moment pass and saw property after property go to someone else.  I finally called the seller's agent to discuss a duplex I was interested in (it was already under contract).  The call led to me finding out about the Victory Drive 4-plex and I made an offer.  I was asked for a best and final a couple of days later (I added $7k to my initial, full price offer) and it was accepted.  Joy!,  but it wasn't long before I was learning Lesson Number 2...

Investment Info:

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

Purchase price: $192,900
Cash invested: $68,225

This property is two duplexes (4 units) with each duplex having a 2/1 and a 1/1 unit. Purchased with 3 or 4 units rented ($525 for 2/1 and $425 for 1/1s) and the 4th unit requiring significant renovation (subfloor rotted) with no current renter. Overall rehab ongoing and estimated $20k cost. Plan to refi after renovation complete and renter in place (est $695 for 4th unit post rehab).

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

I am interested in stacking multi-family properties every year or two as best I can. This is my first mulit-family purchase

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

I found it by calling a local broker to ask about another deal he had listed on the MLS.

How did you finance this deal?

I financed it with a commercial loan at 25% down and 4.75% interest. 15- yr amort. with 5- yr term.

How did you add value to the deal?

By renovating the unit with the damaged subfloor and adding basic improvement to it and each of the other units as they come open, I plan to add 25-35% additional value in the next year or two. A cash out refinance is optimal with reclaimed dollars going into next property purchase.

What was the outcome?

I just closed and am beginning the joys of problem discovery in the reno. The floor is really bad in my empty unit. Budget may go over considerably...don't know yet.

Lessons learned? Challenges?

Will update this in the near future...

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

Agent - John Courson (First Commercial Real Estate - Valdosta)
Lender - Travis Hill (Southwest Georgia Bank - Valdosta)
Property Manager - Leanna Pledger (Wiregrass Properties - Valdosta)
Insurance Agent - Wesley Tyus (Tyus Insurance Group - Hamilton)
Attorney - Jennifer Walker (DoverMiller - Valdosta)