First Multifamily BRRRR Complete During COVID
Investment Info:
Small multi-family (2-4 units) buy & hold investment in Fayetteville.
Purchase price: $100,000
Cash invested: $35,000
This property is a quadplex in Fayetteville, NC that we closed on at the end of March 2020. Still at the time with such an unclear picture of what COVID would like - the lot being split into two parcels, rehab, full rent, and refinance all took place during the COVID crisis.
What made you interested in investing in this type of deal?
I've been lucky enough to have a great friend and mentor who got me into Real Estate investing and invests in Fayetteville. Because of his work in the past, and my commitment to listening/reading/talking to anyone in order to learn, I was able to quickly set up my Core Team of a Realtor, Property Manager and Contractor. This was a great fit for a BRRRR deal due to the purchase price, ability to split the lot into two parcels each with it's own duplex, scale of rehab needed, and rent potential.
How did you find this deal and how did you negotiate it?
Daniel Kidd was the realtor we used through 5 Pillars Realty and he had a connection with a Wholesaler in the area - off market deal.
How did you finance this deal?
Cash purchase for $100,000 and another $38,000 in rehab needed, primarily on one of the duplexes.
How did you add value to the deal?
Complete rehab and renovation of 2 units, minor updates to the other 2. As I mentioned, both properties were previously on one lot. I was able to confirm the zoning and size of the lot prior to closing and arrange for a survey company to split the lot into two separate parcels.
What was the outcome?
After the reno we were able to establish a strong yearly rent in the 2 previously vacant units. When current leases are up within the other two, due to minor updates and effective PM in place, these will be able to be increased. Refi was successful and we were able to pull out $105,000 of the original $138,000 invested. $33,000 left in the deal. 20% of what the new ARV is (165K) This is what it's all about. Getting on base, not hitting a grand slam with the first property, but taking action!
Lessons learned? Challenges?
Definitely learned a lot with my first deal!! This property won't let me retire tomorrow, however, it is a snowball rolling downhill. Closing Costs for the Refi were doubled when I split the lots into two properties. While this did give me multiple exit strategies if needed, the "cap" on appraisals in the area made it so that the value of this split may not show up immediately on the front end. My Core Team has been established and any property moving forward in this area, we're better prepared!
Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?
Daniel Kidd at 5 Pillars Realty was exactly what I needed - knowledgeable and helpful.
Spoat Jackson & Browne Property Management - RJ is quite literally the man.
