Great value ad duplex
Investment Info:
Small multi-family (2-4 units) buy & hold investment.
Purchase price: $80,000
Cash invested: $40,000
Bank owned duplex bought on auction website. 100% self funded. No loans (Due to COVID-19). Purchase $80K Rehab $40K All in $120K. ARV $140+ and agent says he thinks I could get $200K once rezoned and units are rented. The plan is "Buy and hold" rather than flip.
What made you interested in investing in this type of deal?
Looking at everything from single family to small apartments (8+ units). Found this and it looked good. It was a duplex, 2bedrooms up and 2 bedrooms down, but zoned single family. It had a large room going across the back side of the house with a 2nd bathroom. I split that large room into 2 bedrooms with a new interior wall which included closets. One of those units got the bathroom making a master suite. This took that unit from 2 bedrooms to 4 bedrooms.
How did you find this deal and how did you negotiate it?
I found it on an auction site and won the bid knowing I had good "value add" opportunity with adding two more bedrooms.
How did you finance this deal?
100% self funded. Due to the early stages of COVID-19 everyone stopped lending. I did not want to miss the opportunity so I used my own money from a cash out refi on my personal residence.
How did you add value to the deal?
I split a large room into 2 bedrooms in the lower unit. Total rehab including central HVAC on lower unit and a new roof.
What was the outcome?
Almost complete. Expect rents to be around $1300 lower and $500 upper. Opportunity exists to do added rehab on upper (inc. HVAC) and increase rent. Also, when rezoned and separately metered rent can be bumped a little more.
Lessons learned? Challenges?
Sometimes you gotta do your own thing (self funding) and come up with your own solution. If it's a good deal...find a way to get it done.
Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?
Absolutely. John McKnight is my agent and mentor. He also has his own investment properties so he knows what you're looking for. Almost all of my prospects, including this one, I found on my own but look for his thoughts on every property before I make a decision. He also was my agent getting my first flip sold. He had great advice for me on that property as well.