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Todd Hull
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Fourplex flip- Loxley AL

Todd Hull
Posted Dec 5 2022, 13:01

Investment Info:

Small multi-family (2-4 units) fix & flip investment.

Purchase price: $156,000
Cash invested: $130,000
Sale price: $435,000

Extremely distressed FourPlex. It was occupied by four families, none of which had leases. It was a great neighborhood but the only good thing about it was the roof (thanks Hurricane Sally). The local police department know this property as drug central and violent domestic disturbances on the regular. It took four months to close because I knew it would be a 100% gut job and I wanted all tenants out before we closed. It was my first purchase needing what I thought would be a $60,000 improvements but ended up being $130,000. Many lessons learned, but it paid out well in the end. We did three long term rentals and one mid term unit to travel nurses, then sold it.

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

I really bit off more than expected on this project. I had one fourplex and thought I wanted another. It was way too much remodel work for someone that had never done that before.

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

I won this deal by beating 17 other offers in multiple offer situation. I found it on the MLS hours after it hit the market.

How did you finance this deal?

I began by using a credit line with my local bank. I was able to make a cash offer by doing this. The credit line was 200k and purchase price was $156k. I used the remainder of the credit line on improvement plus too much cash.

How did you add value to the deal?

We did $130,000 of work to this property. All new flooring, New water heaters, sheetrock, new bathrooms, cabinetry, lighting.....EVERYTHING! Painted the outside as well. This project was purchased during a dry season and I didnt realize it had a drainage issue off an adjoining property. Unexpectedly I had to spend $22,000 on underground drainage because water collected in the parking area. I didn't budget for that or a new parking lot, but I went ahead and finished it right.

What was the outcome?

We received an off market offer of $435,000 and decided to take it. Being a full-time realtor, I was struggling to keep up with the chaotic market of the spring, and the four plex was taking all my time. This flip provided us with the capital to be in a buying position today.
It all works out though. If I would've known about the repairs needed, I would've backed out but in the end this ended up being a life changing investment for us. We needed that to get funded to make another investment.

Lessons learned? Challenges?

CHALLENGES! 1. NEVER hire family- The shortage of contractors was unreal in early 2022 and I was forced to hire a distant relative to oversee this job because he was the only one with time to take it. He did great on the big surface items, but the detailed finishing was horrible. Also had a bad dispute on money in the end and caused unnecessary tension to this day.
2. I will never buy a property without fully understanding the drainage situation with 50" of annual rainfall.

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

I represented myself.

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