Purchased 2 Duplexes in Evansville, Indiana
Investment Info:
Small multi-family (2-4 units) buy & hold investment in Evansville.
Purchase price: $95,000
Cash invested: $7,500
I purchased this property with another duplex owned by the same investment group for $95,000. The total loan amount including the $42,000 put into renovations is $137,000. I did come out of pocket $7500 as well bring all in to $144,500.
What made you interested in investing in this type of deal?
Despite one unit having fire damage and needing a full gut job, the other 3 units were rented or rent-ready. Because of the extensive damage to the one unit I was able to negotiate a good deal on both duplexes.
How did you find this deal and how did you negotiate it?
I had previously purchased a property for this investment group and knew they were looking to sell more. I stuck firm to my price because I knew the city was coming down hard on them because of the unit with fire damage. They were willing to add the additional duplex to the deal because of the situation they were in.
How did you finance this deal?
Construction loan that loaned 80% of the ARV. I did have to put 20% down, which the bank gave me notice of 1 week before closing. I had never had to bring money to closing before so that was a stressful week to say the least.
How did you add value to the deal?
Fixing the fire damaged unit up into a beautiful 2/1 added a good amount of value to that property. I also rented out the vacant unit in the other duplex so I have added over $1200/month having those two units rented.
What was the outcome?
Duplex #1 appraised for $75,000
Duplex #2 appraised for $90,000
Total Equity = $20,500
Duplex #1 rent = $1100
Duplex #2 rent = $1220
Lessons learned? Challenges?
I have to work harder on getting my construction numbers correct. I went over budget simply by not factoring in all of the needed expenses. We didn't really have unexpected expenses. I just didn't factor in everything I should have.
I also had a two week delay because my GC and HVAC guys were not communicating. They did not like working with one another so they stoped talking. I should have been more present and caught the issue sooner.
Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?
Shane Wike is my General Contractor. He's rough around the edges, but is honest and hardworking. He's also a great communicator which is great on projects like these. Allie Peach (wife) and amazing designer. She designed the whole house, down to the cabinet hardware.