This is a story all about how a house got flipped, turned upside down. I’d like to take a minute, so sit right there, and let me tell you the story of a house called tre-fair...
We are in real estate investing for long term income - my wife and I work as independent contractors - so no pension is in place for us. We want monthly income that will grow over time and at least keep pace with inflation. Multi-Family is that plan.
We didn't know early enough to finance a duplex/tri/4plex as our first home - so when we moved to Anchorage we bought our SFH. It was great. Yet - we wanted to gear up for the long haul - so we saved for an investment property. In 2013 we had an opportunity to form a partnership with family and buy a 6plex in Wasilla - it was a great deal - and so we jumped in! Just a year later we had saved up enough again to buy our first solo property - (25% down payment) - this is that story:
I had met a real estate agent down the block from us hosting an open house - who was marketing a SFH with a MIL potential. We got to talking about zoning - and he brought up short-platting - which I had previously thought of simply as "sub-dividing." Armed with this new information (to divide a lot up, and sell a parcel for income) I began to scour the MLS through Zillow's map feature - and putting in minimum lot square footage at 10,000 ft. In Anchorage - we have the Chugach Mountains to the east - and Cook Inlet to the west, north, and south really - buildable land is limited.
Within two weeks I found a house for sale that caught my eye. This is the aerial photo I first saw:
Clearly - it looked to me - this was a “double” lot. The home was listed for $325,000 - zoned R2M - which is a multi-family designation here - and had a lot size of 17,500 sqft.
We knew we wanted to divide the lot and sell off half - and we knew this old split level home we wanted to turn into a rental. We bought it at $275,000 - using a construction loan with a local bank to finance the renovations - we put down 25% on a $350,000 loan package (75k for renos).
We hired a surveyor to run the paperwork with the Municipality - and we were able to carve off land. We had a scare when we learned water was in one street and sewer in another - we had only 4 inches of margin to create a flag shaped lot - phew we were fortunate! Lesson learned - do more research on the front end - we got lucky. We got a buyer for our lot at $75,000 - and soon we had much of our invested capital back. We then used the remainder of our remodel budget to hire contractors and purchase materials. Some epic struggles were involved here - we had our main contractor go from an 8 week total timeline - to not beginning any work for 12 weeks (even after receiving 25k up front for materials). I really learned some lessons the hard way friends - in the end two GC's got fired and I finished out the reno's myself. A hard season - but I am stronger for it!
After the short-plat of the land - the lot size we had left allowed us three units in the property. We now have a conforming triplex. We have a three bedroom upstairs, a two bedroom downstairs, and a one bedroom on the side (ranch style). Gross rents come to around $3,800 (we pay utilities). With a 30yr fixed 4.5% rate - and no deferred maintenance - we cash flow nicely.
Some of the work we did - open up the upstairs kitchen - paint - new flooring/carpet throughout, new roof, new attic insulation, exterior paint, coin op and in-unit laundry, new entryway for ranch unit (which was 100% new), 10+ new windows, etc.
lower unit living before
lower unit living after
old upstairs kitchen photo
new upstairs kitchen view
lower kitchen before
lower kitchen after
ranch kitchen before
ranch kitchen after
ranch entry before
ranch entry after
Looks great @Jamie Rose thanks for sharing!
Hey @Jamie Rose , Congratulations on recognizing the potential and completing that multifaceted deal! The reno looks great!
Looks awesome!!!! Congratulations!!!
Nice fresh prince reference. So, with the construction loan, you were able to short plat before converting to conventional. Interesting...
@Connor Dunham - haha thanks. yes - we did - the bank lending, FNBA, required us to escrow some of the land sale funds until we converted to conventional financing - in the end we actually did a 70% ltv cash out re-fi - so property was then re-appraised in spring 2015.
@Lawrence Tupai - thanks! We'll get together yet! DM me again!
@Jamie Rose awesome, good idea. I’ve been looking at land a lot lately myself.