Buy, Renovate, Hold and now a Padsplit

[Kelly Asmus]

Investment Info:

Townhouse buy & hold investment.

Purchase price: $320,000
Cash invested: $65,000

Hoarder in foreclosure. Picked up this great location townhome where the HOA takes care of the exterior, so only needed to renovate the interior. Took 6 loads of a U Haul to empty the townhouse, pulled all the flooring, lighting, floorboards - the former owner had multiple pets - and replaced a good amount of subfloor that was quite smelly with cat pee. Kept kitchen cabinets, counter tops to do later - cleaned, painted, new flooring and appliances, replaced several windows, new trim and fixtures and it felt brand new. Currently occupied as a Pad split with 2 separate tenants and a family member.

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

I knew the renovation was just interior. HOA maintains exterior so I could itemize costs and get a really solid budget quickly.

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

I am a full-time broker and an agent in my office sent it around and told everyone it needed to sell in a week to avoid foreclosure. I knew the address/location and the neighborhood. Called him, saw it that day and made an offer. I was already on the hunt for a new project, so had financing in order. We made a decision fast and executed on time to make the deal work for the seller. We also offered for them to leave behind what they couldn't move, factoring in dump fees to our costs.

How did you finance this deal?

Fixed mortgage. Bought the rate down a bit to get it to cash flow. 20% down and paid for the renovations out of pocket.

How did you add value to the deal?

The lower room / basement area - we added an egress window to make a legal 3rd bedroom. So went from a 2 bed to a 3 bed, plus a nearly gut renovation to bring it back to life.

What was the outcome?

Currently renting it by the room. 3 beds and 3 baths, so each tenant has their own. It's an excellent long-term hold, easy to rent and cash flows.

Lessons learned? Challenges?

Kilz is the bomb. Rolled 2 layers on every surface and got rid of the cat smell.

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

I am a full-time broker, so used the buyer's agent commission to pay closing costs.

[Miller McSwain]

This is awesome! I just wrote the Co-Living book for BP, so I'm glad this is working well as a room rental!

Personally, I don't use PadSplit for marketing. But I'm always curious how well it is working for others. I don't know anyone using PS in OR. How quickly did you get it filled up and how is the quality of tenant?

You rock!