New investor with paid off duplex
I currently own a paid off duplex with a 2/1 per unit but needs work (flooring, cabinets, appliances, paint, A/C, and unfinished bathroom) before putting it for rent. What loan would you use to fix it or what would be your first move as a new investor? I appreciate any advice.
In case you are wondering, I acquired the property through a family member.
Hi Rene,
If you are wanting to DIY, some places have material shortages and some places labor shortages right now, so a pending loan payment might bite you out of pocket longer than you think.
If it were mine, (if it's not been done yet) I'd have a property inspector inspect it and provide a written document of everything he finds that is needing attention.
While he is doing the report (since it's summer-ish) I would look at the yards, front, back and side and think about what could be done to improve curb appeal, and make a list of this. Lawn, trees, shrubs, driveway oil spot removal, repaint exterior, etc..
When the inspection report comes back, I'd rank things according to "Must do now", ie leaky roof, concrete walkways heaved up--trip hazards, bad water heater, etc..
I'd get some bids on these items (and ask about financing them if needed).
Then get them done.
The next items on the list would be looking at each apartment make a punch list of what needs to be done to turn the units for the next set of renters, carpets, LVP, paint walls, ceilings trim, etc...
Then see what workers and material are available, and if one apartment can be done quickly and the other takes a long time, do the quick one and rent it out while waiting on supplies or workers for the second one. Can one unit go into production (of rental income) materially sooner than the other.
Make sure your workmen pull permits, when it comes time to sell, you will probably be glad they did.
Watch your seasons for working outdoors, window replacement, roofs, landscaping, concrete replacement, outdoor painting, etc...
Good Luck!
Hi @Rene Cedillo, if your goal is cashflow, I would fix it up and then do a cash-out refinance for 10-20% of the value to get the cash you invested into the repairs back.
If your goal is to get more properties, I would refinance for 70-75% of the value and use that equity to cover your repair expenses and acquire additional properties.
Hope this helps! Let me know if I can be of any assistance.
Hey Rene!
You could do a short term fix and flip loan, and then refinance out of the loan once the repairs are complete.
The rehab expenses would be paid back immediately as they are completed, and your cash proceeds wouldn't be tied up in the renovation.
DM me if you want to chat more in detail.
@Rene Cedillo If the cash flow is good and you can pay back the renovations in under 18 months then I'd get a HELOC. Otherwise I'd get a small refinance loan.
- Conner Olsen with The Moorhead Team
- 702-521-0034
- [email protected]
Yes, we do this all the time. We do a delayed purchase since it is paid for which allows you to enter the fix and flip program and get the rehab funds.
-
Lender
- 267-251-7649
- [email protected]
Thank you for all the advise, I really appreciate it!