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After many brief hiatuses I am back; and with good reports.
Many of you may remember my mobile home investment thread from when I was 19 years old. After a couple additional mobile home deals, some miscellaneous arbitrage, and saving; on Monday this week I closed on my first multi-family apartment building.
(little rainy on Tuesday morning)
The building was an REO from Wells Fargo and has 3-units, 2 of which are currently finished:
Unit 1 - 1st floor: 2 Beds, 1 Bath
Unit 2 - 2nd Floor: 3 Beds, 1 Bath
Unit 3 - Garden: Unifinished (Will be 3 Bed, 1 Bath)
The bank really polished this one up to get it sold. Brand new wood floors, 3 separate water heaters all brand new, two new kitchens with new appliances, three separate electrical meters, replaced galvanized pipes with copper piping, new furnace, separate gas meteres, new steel main-beam and supports, and more.
Got in for 70% of the current FMV (~$211,000). Put 3.5% down under FHA lending, seller closing credit of $7,500. Locked in a 3.25% 30-year mortgage.
Deal Details
Cost summary:
$5,000 earnest money
$900 due at closing
Capital Improvements:
Injecting $5,000-$6,000 cash to have top two units fully operational
Future injection of ~$17,000-20,000 to finish basement
Pro Forma garden unit renovation operations:
+Monthly Cash Inflow:
Unit 1 rent: $1,100 - ($550; because I currently occupy one room)
Unit 2 rent: $1,350 w/ parking
Unit 3 rent: $1,200 - (projected)
Laundry: $50 per month
Total: $3,700 (without me)
(-)Monthly Cash Outflows:
Expenses @ 45%: $1,665
Vacancy @ 5%: $185
Total: $1,850
=NOI: $1,850/mo
(-)Debt Servicing:
PI+PMI: $1,106
=Monthly Cash Flow: $744
The building across the street which has similar finishes and layout just sold for $300,000 in March with an unfinished basement. Instant equity has been created. I am currently appealing tax assesment to get tax amount even lower. All in, I will have spent $11,900 to own two operational units, and will likely use a HELOC for the basement reno.
You make your money when you buy, not when you sell.
I need to thank GLC65, RealOG, SteveO, and DRB for the continued inspiration over the years :cheers:
Short term: Finish basement to legal code(~$20,000), full occupancy; live-in gross rent of $3150 (I’m still living here)
Mid-term: Continue working (high paying job I am only doing for two years) and cash-out refinance the building for equity in 2 years or sell depending on market conditions
1+ years: 50 Units in an select overbuilt market and two creatively financed mobile home parks with 40-60 lots each.
Side note: I continue to dabble in domain ownership and have a few website ideas I am tinkering with also.
Stay hungry, stay foolish.
G. Alexander
Many of you may remember my mobile home investment thread from when I was 19 years old. After a couple additional mobile home deals, some miscellaneous arbitrage, and saving; on Monday this week I closed on my first multi-family apartment building.
(little rainy on Tuesday morning)
The building was an REO from Wells Fargo and has 3-units, 2 of which are currently finished:
Unit 1 - 1st floor: 2 Beds, 1 Bath
Unit 2 - 2nd Floor: 3 Beds, 1 Bath
Unit 3 - Garden: Unifinished (Will be 3 Bed, 1 Bath)
The bank really polished this one up to get it sold. Brand new wood floors, 3 separate water heaters all brand new, two new kitchens with new appliances, three separate electrical meters, replaced galvanized pipes with copper piping, new furnace, separate gas meteres, new steel main-beam and supports, and more.
Got in for 70% of the current FMV (~$211,000). Put 3.5% down under FHA lending, seller closing credit of $7,500. Locked in a 3.25% 30-year mortgage.
Deal Details
Cost summary:
$5,000 earnest money
$900 due at closing
Capital Improvements:
Injecting $5,000-$6,000 cash to have top two units fully operational
Future injection of ~$17,000-20,000 to finish basement
Pro Forma garden unit renovation operations:
+Monthly Cash Inflow:
Unit 1 rent: $1,100 - ($550; because I currently occupy one room)
Unit 2 rent: $1,350 w/ parking
Unit 3 rent: $1,200 - (projected)
Laundry: $50 per month
Total: $3,700 (without me)
(-)Monthly Cash Outflows:
Expenses @ 45%: $1,665
Vacancy @ 5%: $185
Total: $1,850
=NOI: $1,850/mo
(-)Debt Servicing:
PI+PMI: $1,106
=Monthly Cash Flow: $744
The building across the street which has similar finishes and layout just sold for $300,000 in March with an unfinished basement. Instant equity has been created. I am currently appealing tax assesment to get tax amount even lower. All in, I will have spent $11,900 to own two operational units, and will likely use a HELOC for the basement reno.
You make your money when you buy, not when you sell.
I need to thank GLC65, RealOG, SteveO, and DRB for the continued inspiration over the years :cheers:
Short term: Finish basement to legal code(~$20,000), full occupancy; live-in gross rent of $3150 (I’m still living here)
Mid-term: Continue working (high paying job I am only doing for two years) and cash-out refinance the building for equity in 2 years or sell depending on market conditions
1+ years: 50 Units in an select overbuilt market and two creatively financed mobile home parks with 40-60 lots each.
Side note: I continue to dabble in domain ownership and have a few website ideas I am tinkering with also.
Stay hungry, stay foolish.
G. Alexander
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