Long-distance duplex purchased site unseen using Solo 401k
Investment Info:
Small multi-family (2-4 units) buy & hold investment in Toledo.
Purchase price: $64,900
Cash invested: $35,400
Another long-distance duplex investment purchased site unseen using my newly established Solo 401k that I rolled over from my previous employer. Lower unit was occupied but upper unit was vacant, so we went right to work painting, installing new floors throughout the entire unit, replacing light fixtures, cabinet hardware, and addressing general maintenance issues.
What made you interested in investing in this type of deal?
Continuing to add to my portfolio of multifamily, cash flowing properties for buy and hold in an area that I own another property in.
How did you find this deal and how did you negotiate it?
This was brought to me by my Property Manager but had been listed on the MLS for a while. Seller was asking $78,500, but we negotiated down to $64,900. The seller was extremely easy to work with and this was a win-win for both parties.
How did you finance this deal?
My business partner and I went 50:50 on this property. We found a non-recourse lender and created a sub-LLC made up of my Solo 401k and his LLC to fund the 35% down payment
How did you add value to the deal?
We were able to purchase the deal well below the listing price, then go straight to work remodeling the vacant upper unit. Once fully occupied, we will move the lower unit tenant from the seller's month-to-month lease to our 12 month lease, and have all utilities split between both units, creating more cash flow in the process.
Lessons learned? Challenges?
This was a great learning experience! Finding a non-recourse lender was tricky, especially because it involved bringing in a partner and having to create a sub-LLC that is made up of my Solo 401k and his LLC. This whole process was uncharted territory for us, and making sure I set things up correctly was nerve-racking and crucial to ensure no prohibited transactions occurred. In the end it all worked out and I have another tool in my toolbelt!
Cool stairway to upper unit
Lower kitchen
Lower living room
Lower den
Stairs to upper - before
Stairs to upper - after
Upper kitchen - before
Upper kitchen - after
Upper kitchen - after
Upper living - before
Upper living - after
Upper living - after
Upper bedroom - before
Upper bedroom - after
Upper bath - before
Upper bath - after
Basement
@Justin Wotring are you sure it’s A non recourse loan? Or is your business partner with the non Retirement fund assets guaranteeing the loan with his assets?
@Todd Goedeke yes it's a non-recourse loan
It sounds like a nice investment. Congrats! Did you find it challenging to have a contractor do the work from a distance or do you have someone in the area that you've worked with before?
