Real estate investor and YouTuber Adriel Hsu is pulling back the curtain on what owning a multifamily property actually looks like over the long term, and it wasn’t nearly as passive as social media often makes it appear.
In a recent video, Hsu broke down the full seven-and-a-half-year journey of buying, renovating and operating a 14-unit apartment complex he purchased in 2018. It included losing more than $17,000 to a failed property management company and dealing with a tenant lawsuit after someone fell through the second floor.
From Cold Letter To Apartment Owner
Hsu said he originally found the property while driving around neighborhoods where he liked to invest. After spotting the building, he looked up the owner through county records and mailed him directly.
Don’t Miss:
- Investors With $1M+ Often Use Advisors for Tax Strategy — This Tool Matches You With One in Minutes
- Jeff Bezos Isn’t Alone — Discover the Asset That’s Outsmarted Stocks Since 1995
The owner, a retired ship captain living in Florida, initially wanted $550,000 for the property back in 2017.
At first, Hsu thought the deal didn’t make sense financially because the operating expenses were extremely high. He initially offered just $425,000 after reviewing the numbers and the owner refused.
After spending a year studying multifamily underwriting and reviewing more deals, Hsu realized the issue wasn’t necessarily the property itself. Instead, he believed poor management was inflating expenses.
By the time he figured that out, the market had already moved higher. The seller rejected his offer of $550,000 and eventually negotiated the sale price up to $630,000.
Financing the property also proved difficult because lenders didn’t consider his previous house-flipping experience as multifamily experience. Eventually, a small local credit union agreed to finance the purchase after Hsu presented a detailed plan for reducing expenses and improving operations.
Trending: Think the biggest tech gains happen after an IPO? Click here to see why some investors are looking at opportunities before companies go public.
Lawsuits, Stolen Rents And Turning The Property Around
The problems started almost immediately after closing.
Hsu hired a new property management company that had recently spun off from the previous management group. But within three months, communication stopped and rent payments disappeared.
According to Hsu, the company went bankrupt after using collected rents to keep the business afloat.
“I was out over $17,000,” he said. That loss included security deposits, January rent and prepaid February rent.
The investor then decided to self-manage the property remotely. He said one of the biggest operational upgrades was replacing traditional locks with electronic keypad deadbolts to reduce maintenance calls and tenant lockouts.
Things became even more chaotic in 2019 after a tenant fell through a damaged upstairs floor during repairs related to a roof leak. The tenant later sued Hsu for $250,000, claiming negligence and injuries.
See Also: Skip the Landlord Headaches — Invest in Midwest Real Estate Passively
The lawsuit dragged on for six years before finally settling in February, one day before trial, according to Hsu.
Despite the setbacks, the property’s finances eventually improved dramatically.
After several years of renovations, tenant turnover and operational fixes, Hsu refinanced the property in 2022 after it appraised for $950,000. The refinance returned roughly $252,000 to him while lowering his interest rate.
“It took a lot of hard work and sweat equity to turn the apartment complex around into an automated autopilot cash flowing machine it is today,” he said as the building now …
This post was originally published here
