MTR/LTR fixer upper in Duluth, MN

[Brittany Kuschel]

Investment Info:

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

Purchase price: $145,000
Cash invested: $60,000

Buy and Hold Fixer Upper Duplex (owner occupy while renovating) - Upper level unit is being rented as a mid-term fully-furnished ranging from $1,775 - $2,100/month. Lower level unit is renting for 1000/month plus tenant pays electricity.

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

We are always open to attractive value-add buy and hold investments. I was most interested in having data to analyze within the MTR sector.

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

I am a licensed Realtor and the seller contacted me to provide a market analysis as she was interested in selling the property. I let her know that I was instead interested in purchasing it rather than listing it.

How did you finance this deal?

We utilized conventional financing through a local community bank.

How did you add value to the deal?

We lived in the property while we renovated/updated it. After moving out, we also hired out refinishing of the floors and some work in the upper level unit to get it "rent ready". Updated kitchen on LL with new cabinet fronts and drawer fronts, new hardware in kitchen, new countertops, some new light fixtures & fans, repainted kitchen, repainted all interior walls, refinished original hardwood floors, cleaned up basement and painted/epoxy flooring. In upper level unit we installed a new kitchen.

What was the outcome?

Both units have had quality and consistent tenants. LL renting at $1,000/mo and UL renting MTR $1,775 - $2,100/mo.

Lessons learned? Challenges?

A complete kitchen renovation takes much longer than we projected and old homes that settle make for uneven wall seams. Cost projection for total updates was underbudgeted. Next time, we will hire out more projects sooner rather than trying to fit them into our limited free time, and we will increase our projected budget by 20% for unknowns.

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

I am a licensed real estate agent. We worked with Deerwood Bank, which we would use again, but I was not satisfied with the mortgage loan originator that we used.

[Zach Edelman]

Nice looking cashflow/potential cashflow!