Value Add Duplex- (-$650) to +$480 cash flow by split utilities

[Matthew Morrow]

Investment Info:

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

Purchase price: $250,000
Cash invested: $35,000

Value Add purchase w/ partner. Severely Under performing duplex for sale with all owner paid heat / single boiler. Out of state owner wanted to cash out. We purchased this on-market. Immediate addition of a 2nd gas meter / boiler to remove that expense, and change lease terms / sign new tenant at market rent. Instant 40K equity and turned a -$650 / mo net cash flow at purchase into a +$480 in 30 days with <12 days vacancy.

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

Local and fit criteria post renovation

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

On market- MLS
Negotiated with agent directly on terms knowing value add potential

How did you finance this deal?

Commercial / Conventional

How did you add value to the deal?

Adding 2nd Gas service & boiler to bill tenants for units directly. Lease term adjustments and new tenants at market rent. Also- renting garage space individually commanded more gross rent.

What was the outcome?

Still Holding & cash flowing- 0% vacancy

Lessons learned? Challenges?

Municipality Address was wrong in USPS , utilities, and tenant leases for 20+ years prior. Changing that to match the deed and county 911 records was a simple letter from the town- but time consuming.

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

Self represented as an agent.