MFR #3 - Work in Progress

So MFR #3 was a 12-unit complex.  This is our first MFR above 5 units.  What a learning experience this one has been.  A quick recap is we purchased this for about 25% less than the appraisal.  Our plan was very similar to MFR #2, except this one wasn't in disrepair and was partially rented.  5 units were rented when we purchased and 1 unit was being used as storage.  Our plan was to purchase, put a little work into it, allow the 12th unit to be rentable, and refinance once full to pull all of our cash back out of it.

Some other items of note:

-- The property was poorly managed so our intention was to replace the property manager.

-- The owner currently paid all utilities (Power, Water, and Cable).  Water must be paid as it isn't separately metered, but we wanted to move all tenants to paying their own cable and power.

-- Some units were furnished. We are not in the business of providing furnished apartments, so our long-term goal is to get rid of all furnishings and no longer provide those.

-- We had to come up with somewhere to store everything in the 12th unit, so we planned to purchase a small piece of land and put up a storage unit to hold things like furnishings and everything in unit #12.

So as you can see, the plan is pretty complex.  Our plan was to have all this done by Jan 1, 2018 (Spoiler: That didn't happen, not even close).  Below is a decently detailed account of the timeline so far.

Spring/Summer 2017 - Our focus right out of the gate was to get the complex more rented than it was.  We had 11 rentable units and only 5 tenants.  A new PM was put into place within 30 days of purchase. At this point, we went to work getting some repairs done and beginning to figure out our plan for all the items above.  Expenses were way out of control.  Going forward, any new tenants would pay their own utilities and provide their own furnishings.  Over the summer we didn't have much luck with tenants.  We did add a couple but lost a couple as well.  By the end of summer, we were still at 5 and hemorrhaging money (but we had planned for that).

Fall 2017 - We purchased the land we had planned on and got the storage unit put into place.  We began to get the 12th unit renovated and got about 75% of the way through and decided to hold off on more until we got more units rented.  We did go +1 on the count to 6 units rented.

Winter 2017/2018 - Here is where everything is starting to come together.  We went +2 on the units rented to 8 total and as of this writing have 3 applications in for future renters.  So things are starting to look up on the units rented total.  Our goal is to get back on the 12th unit once we reach 10 units rented so that should happen soon.  As of February 2018, all units are now paying their own Power, so check that item off the list.  We did reduce rent somewhat to make up for the electricity being off our books but we should come out very positive on that change.  Cable is still up in the air and may phase out as we loose all the original renters but that's a drop in the bucket compared to power.  Cable averaged ~$35/unit where some units were using $200-$300/month (or more) in power.

Current status:

So to sum up kind of where we are overall:

-- 8 units of 12 rented.

-- 12th unit 75% done and almost ready to occupancy.

-- All scheduled repairs and updates completed.

-- All units are now unfurnished.

-- All power is moved off our master bill.

-- Only a few units left with us paying cable, but will slowly go away.

-- Land purchased and Storage unit in place.

What's left:

-- Finish unit #12 and get it ready for occupancy.

-- Get up to 12 units rented.

-- Refinance and pull all (or most) of our money back out).

Our new adjusted completion date is now Summer 2018.  Here's hoping we can get it done!  That will make it slightly over a year (~14-15 months) since purchase so in hindsight that's not a horrible timeline).

One final thing to note.  We expect February 2018 to be a breakeven month (or thereabouts) so things are looking up!