Duplex remodel in Historic Gatewood in Oklahoma City/OKC

[Ben Scott]

Investment Info:

Small multi-family (2-4 units) buy & hold investment.

Purchase price: $165,000
Cash invested: $44,000

This duplex has a lot of history with me. My aunt and uncle have owned this property since the mid-1990s. I used to mow the yard in college with my brother. And every time I drove through the historic Gatewood neighborhood, I opined on this duplex's potential. My uncle had two tenants that had stayed 25+ years. But I said, should they ever leave and you want to sell, please let me know first.

We set up an owner finance agreement and I funded the rehab. Both tenants of the duplex were special needs and, suffice to say, the place was rough. Roaches and roach droppings were everywhere. But we added new floors, paint and did some major updates to drywall, electrical and plumbing. My biggest project to date. I plan to refinance this once I've owned it for 6 months and believe it will appraise close to $250k based on comps in the area.

What made you interested in investing in this type of deal?

The Gatewood area is an up-and-coming neighborhood, just north of the gentrified Plaza District and south of Oklahoma City University.

How did you find this deal and how did you negotiate it?

I negotiated a seller finance with the owners, who happened to be my aunt and uncle. They have several rentals and are looking to divest as they become vacant. I've always had my eye on this duplex though given the location.

How did you finance this deal?

Seller finance. I put $10k down and financed the remaining $155k on a 15 year note at 5.75 percent. My mortgage is $1287 per month.

How did you add value to the deal?

I did a complete remodel. This place was riddled with roach poop and moldy carpets. We put in nice LVP flooring, repainted all 2400 square feet. Painted the kitchen cabinets a bold navy blue and upgraded the hardware. Added dishwashers and ovens in both units. New sinks and fixtures. Painted the exterior siding and added gutter guards.

What was the outcome?

I rented the one bed/one bath unit for $795/month. I rented the 3 bed/1.5 bath for $1200 a month. My expenses are about $1600 with mortgage, insurance, taxes and water. I believe the home will appraise if/when I refinance to a 30 year note to at least $250k

Lessons learned? Challenges?

Covid 19 was a challenge, simply for a supply issue. I couldn't find dishwashers or ovens in stock. Paint was another challenge. I chose a high quality Sherwin Williams interior paint. But the drywall, riddled with years of smoke and other odors, soaked up the paint like a sponge. In hindsight, I'd have used a lower quality paint as a base and then finished up with the top quality paint.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

I'm a licensed agent in Oklahoma and was able to organize the contracts myself.