Investment Info:

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

Purchase price: $126,000

I purchased this South City Duplex for $126,000. We completed a pretty comprehensive scope of work for $88,828 and the property appraised for $250,000 so I refinanced at 75% LTV ($187,500) which left me with a $1,536.67 PITI vs. $2,200 Gross Rent. I left cash in this deal but it cash flows well and the cost segregation study allowed me to utilize a $39,954 depreciation deduction and the property itself basically feels like new construction since we left no stone unturned on the rehab.

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

I already owned a handful of properties on this street and wanted to add this to the portfolio.

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

I pulled it right off the MLS but negotiated a bit lower than asking price.

How did you finance this deal?

I utilized a private money loan on the front end for the purchase & renovations and then I exited into a 30 year fixed DSCR loan.

How did you add value to the deal?

We did over $80k in renovations including a new roof, significant tuckpointing and masonry repair, all new windows, along with all new cosmetic finishes inside.

What was the outcome?

A built to last rental property with a few hundred bucks of monthly cash flow and a considerable amount of depreciation captured in year 1.

Lessons learned? Challenges?

I learned that most of these old properties in South City will require a retrofitting or modernization of the water line connections to the city. This is a significant $8k + cost that you need to account for on a lot of these 100 + year old buildings in STL.