Fourplex renovation. What’s your experiences?

Question

Has anyone bought a fourplex and renovated them before? I have 2 near me going for 45-50k and they need a lot of work. I’m looking for my first investment and I’m really interested in multi families. I was wondering what y’all’s experiences have been! I look forward to hearing from y’all and I appreciate the responses ahead of time.

Pat L. · Answer

The experience is definitely something you will pay for but will bank over time. Knowing what it will cost takes a lot of just doing rehabs. I have yet to find a contractor that can quote reliable costs without tearing out walls etc. So, I assume the worst case scenario, add my wife's 20-30% "told you so" contingency then proceed but only IF the COCROI is there.

Luke Millet · Answer

@Pat L.

It’s that learning experience that I’m really after. When you try to get an estimate on how much the rehab will be, do you get a contract going, pay the $500 and take the 10 days to get bids and inspections done? Then throw that into your calculations and decide from there if it’ll be a good investment? I’m asking because I do not quite have the experience as you may have. I cannot walk a property and estimate the rehab yet like a seasoned investor.

Pat L. · Answer

Done a few & some back to the studs. One 6-unit I had to do a design/install of a complete building fire sprinkler system that passed both Bldg., & Fire Chief inspections.

Biggest issues are bad/hidden handyman fixed plumbing runs/hookups, over amped burned wiring in junction boxes & outlets. Then there are the Egress requirements that are not grandfathered in as well as old poor fitting doors/windows that need to be upgraded/fire proofed/rated.

Good luck it's a heck of a learning experience!!!!

Lee Ripma · Answer

@Luke Millet

I’m actually only looking at the lot-zoning, rents. It just happens to have a SFH on it when I buy it.

Luke Millet · Answer

@Lee Ripma

I like how you could look at a SFH and see the potential for it to be MF. What exactly about a single family home is the selling pint for you to purchase it to turn it into MF? I own a home in a subdivision (first home buyer) and I’m planning on house hacking. Maybe turning it into a multifamily would be better? I need to research it but you probably can’t turn it into a MF since it’s in a subdivision. I’ll find out!

Lee Ripma · Answer

@Luke Millet

Yeah all MF for me. I recently bought 2 SFH, first ones I’ve ever bought. I’m tearing them both down to build MF! I usually say that I’ve never bought a SFH or gotten a RES loan. I guess that’s not true any longer but the SFH were only purchased to tear down. So maybe I can keep my claim to fame intact!

Luke Millet · Answer

@Lee Ripma

I haven’t been to the properties myself but one seems like a gut rehab. The other will not be a gut rehab.

I’m thinking I would prefer multifamily for the fact that all your rehab, tenants, and problems are all located in one spot. It seems from your bio info that you like to deal with multifamily.

Once I get home I can do more research on these properties as well.

Lee Ripma · Answer

@Luke Millet

I have rehabbed several-2 story, 2 units up 2 down with basements. I like rehabbing 4plexes because it’s pretty easy to replace everything. Are you thinking gut rehab?