Asheville extensive rehab and duplex conversion
My wife and I just finished a big project I have been working on for the last eight months. I wanted to share it with the Asheville area. We currently have a mixture of long term and short term rentals but this project was definitely our biggest. I know it is hard to find good long term rental deals here, but with some creativity and work, they still exist.
We purchased this group home back in February. We found it on the MLS listed for $230,000. It had been sitting on there for 18 months. It had multiple people who made offers on it but no one could make financing or their desired use work. The size and footprint made it a perfect shell for a duplex. After calling zoning, we found out it is zoned commercial so it would allow up to 8 units and a duplex would be no problem.
It is a 1,900 sqft brick ranch built in 1973. It had 5 bedrooms and 2 baths. It was in poor condition with some of the following problems:
No hvac
Past termite damage
Water damage in multiple areas with active leaks
Aluminum wiring
Poor layout
Grading issues
Foundation issues
We did some numbers and estimated the rehab to be close to $100,000. That being said, we decided a $170,000 offer would make it attractive. We offered that amount as a cash offer ( personal capital, hard money and family). They accepted with no counter.
We used a guy I know who is a contractor to oversee the project. I organized all the subs, orchestrated the tasks and did a lot of work. Once we got to work is when all the fun started. In order to turn it into a duplex, we had to :
-move multiple walls
-block the main hallway leading to the other end of the house.
-Create another kitchen
-Create another laundry room
-Create a firewall in attic and main level
-Add 2 hvac units with duct work
-Add an additional water heater
On top of all that we had to remodel everything and fix all its issues to make it an attractive rental. We originally planned to only do a partial gut job, but after discovering the aluminum wiring, we tore out everything in order to get to wires and make it easier. Once the drywall was out, the insulation has to be brought to code. We also went ahead and redid the plumbing.
On the outside, we redid the grade to fix water issues, painted the exterior, built new decks, landscaped and added a fence.
This project was pretty tough. We faced a lot of challenges that made it way over budget and take longer than expected. Lumber prices going up, the full gut, rewire and reinsulate made the budget go up significantly. We ended up being close to $130k for the rehab after planning for $100k. A lot of the subs were behind schedule so that really delayed things also.
We were very fortunate that during all of this the market has continued to go up and rents really increased. We still would have been ok but it really sweetened the deal. We have just signed leases for both sides. The bigger side $1,700 and the smaller side $1,600. We are in the process of refinancing and should be able to BRRR out of the house no problem.
Some of the basic numbers reviewed:
Initial purchase price: $170,000
Rehab: $130,000
ARV :$425,000
Rents: $3,300 total per month
Monthly cost:
$100 water est
$100 lawn care
I should be able to refi out with a 75ltv cash out.
My interest rate should be 4.875%
If my cash out is $315k ( to help cover closing and holding cost) my mortgage piti will be around
$1,975
Ill factor :
5% vacancy rate ( really hot market)
3% cap ex
3% repairs
I only did 3% because everything is basically new.
After all of that, my cash flow should be $962 per month.
I had a lot of good help that made this come together.I am really happy how everything worked out. I can’t wait for the next one.
See more pictures below
