Investment Info:
Large multi-family (5+ units) commercial investment investment.
Purchase price: $420,000
Cash invested: $195,000
2023 Purchase Price - $420,000
Renovation Cost - $165,000
2024 Refi Appraisal - $790,000
Current Equity - $198,000
Yearly Cashflow - $122,509
Current Cash Invested - $26,000
What made you interested in investing in this type of deal?
My wife and I tend to look for Commercial buildings with a residential component to them.
How did you find this deal and how did you negotiate it?
This building had a restaurant in it for 32 years that closed not long after we moved into town. I cold emailed and called the owner multiple times and eventually we connected, met in person and made a deal over the course of a few months.
How did you finance this deal?
Seller Financing Terms - 10% Down, 5.5% Interest Only Loan w/ a 5 Year Ballon Payment.
How did you add value to the deal?
After transitioning all four residential tenants, we gutted each apartment and started fresh. We also made serious changes to the exterior entrances and decks. We are now at 100% occupancy in our apartments and our restaurant is committed to a 3 year NNN lease and a $150,000 renovation at their own expense.
What was the outcome?
We were able to refinance with our go to bank at a decent rate in this environment which allowed us to pull out our initial investment and renovation cost. We chose to leave $25,000 invested as a bit of cushion until the restaurant has completed their renovations.
Lessons learned? Challenges?
There were plenty of challenges from removing a homeless person off the property to a water pipe in the basement letting go. The biggest lesson from this one though had to be around timing. We had a few hiccups with the timing of contractors on site and it lead to a 4 to 6 week delay. Also navigating town hall, we learned who calls the shots and who just thinks they do.
Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?
Alpine Title for closing, attorney for the Restaurant lease, and Pentuckett Bank for the refinance.
