Investment Info:
Small multi-family (2-4 units) buy & hold investment in Cincinnati.
Purchase price: $454,000
Cash invested: $90,800
Purchased four separate duplexes in one transaction from seller moving out of state. All on the same street in the Golf Manor neighborhood of Cincinnati. They are likely C+ class buildings.
What made you interested in investing in this type of deal?
My wife and I were living in a duplex and attracted to small multifamily properties in central Cincinnati, that were cashflowing currently but would help us to grow our portfolio and one day subsidize income/kids college funds...we didn't really know what we were doing too much though.
How did you find this deal and how did you negotiate it?
My wife found this on Craigslist and I made contact with the seller. He originally listed three of the properties and after talking found out there was a fourth. Thought about only buying one, but he was willing to come down considerably more on price if we could buy all four at once...so we had to get creative to find money for that large of a 20% down payment.
How did you finance this deal?
This is currently a joint venture with my parents. They have skin in the game, but are almost fully retired and don't want to deal with anything property management related. Plan is to buy them out over time and not mix family with investing, but there have been no issues to date.
How did you add value to the deal?
Executed some deferred maintenance and worked to raise rents much closer to market value within first year of purchase.
What was the outcome?
Still own and self manage, but contemplating selling off these properties in order to fund next venture.
Lessons learned? Challenges?
Buying turnkey properties seemed like a good idea at the time, but I see the value now in buying more distressed properties and fixing to a higher level of quality in order to prevent more frequent minor repairs along the way and to have higher rent on the front end. We took over and did very little to greatly improve the properties and not sure I'd do it the same again.
Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?
Used real estate attorney and title company associated with their practice.
