Last week we closed on our first BIG renovation project! We are buying a beautiful 80 year old home in a historic neighborhood of Baton Rouge, LA. The home is a 2700 sqft 3/3 with a semi-detached apartment in the back. The home has incredible cedar and cypress bones and sits on .72 acres right in the middle of the city.
Our plan is to renovate the back building first and move into it. It is the perfect little studio apartment. It shares roof with the home but is not connected by walls. We plan to renovate it completely. It will have a kitchen and a full bathroom with a custom shower. We will also section off a portion of the back yard just for the little apartment. When we renovate the rest of the home we will put up walls and a laundry/office between the house and the apartment which will
1. capture the square footage of the apartment as living square footage when we sell and 2. add a huge lifestyle upgrade to the home by creating a laundry room and an office in the space between the home and the apartment. Once we move into the apartment, we will begin the “big house” renovation.
Once we finish the big home we will move in and use the apartment as a short term rental with a solid core door between it and the main home.
The home was listed at $465,000, we got it for $430,000 and it appraised for $485,000. By the time we are done it will be a roughly 3400 sqft 4/4 and it will be worth around $750,000-$800,000+. We plan to pay for the renovations, which will total around $150,000, in cash as we go along. Then we will cash out refinance and look at buying our first cash flowing properties. We are so excited to have started demo.
Here we go!
@Jonathan Duhon Hi Jonathan! That is a big first project! That sounds like a very interesting deal and I love the short term rental plan. Are you planning to sell it in 2-5 years and get the cash tax free or keep it long term, it seems like with that big of a loan it may be hard to cash flow.
Awesome project though and good luck!
Thank you @Travis Steinemann . We’re very excited about the little apartment in the back, it was something we waited a while for. We will go ahead and start looking for our next home and sell it after the 2 year period.
@Jonathan Duhon awesome, awesome plan. And good find! I want something like that too to do a live in flip. Lower price point though. Would love to see some before and afters when you get them.
Hey dude! Long time. That's great. Looking forward to keeping up with the process! We just did a BRRRR in Hammond (we did most of the work ourselves) and are refinancing now. Let me know if you need any help swinging hammers and such or if you'd like to talk shop sometime.
@John Roberts what’s up man. Glad to reconnect. Thank you. We’ll be sure to document it all well. That’s solid, I’m looking forward to buying some to hold in the future. I’d imagine Hammond’s a pretty great spot for cash flow huh?
Yeah, I would say so. Of my only two SFH in Hammond in Class B areas, with a 10% allowance for vacancy/maintenance/capex, still looking at approx. 25% COC return on one and 16% on the other with tenants who are on time and reliable.
I also got the opportunity to be a part of my first apartment syndication in the Atlanta arena this past month which is forecasted to be a great deal.
But back to your deal -- what's really cool to me is that it seems like your wife is totally on board. That may be your biggest asset! It's amazing how much synergy you can develop when you have a rock-solid teammate with a consistent vision. You guys are gonna do great.
@John Roberts sounds like you’re up and running brother man. Great work. Our goal is to buy our first two rental properties this year. You know there was a good couple years there that my wife wasn’t seeing the vision but I just kept presenting stuff to her gently and helping her to see what’s possible and eventually she decided “yup, let’s get free, I’m in.” It makes all the difference to have her on board.
Congrats on the deal @Jonathan Duhon ! This sounds like an awesome house hack and value add deal! When you cash out refinance, will you still be living in the home or will you also continue on to a second house hack in addition to purchasing cash flowing properties? Best of luck!
@Jonathan Duhon - Congrats!!
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