Crazy Cat Lady Duplex - BRRRR

[Pete Harper]

Investment Info:

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

Purchase price: $85,000
Cash invested: $100,000

Crazy cat lady duplex. This is a 1960's all brick single story Ranch; originally built with two identical 1200sqrft 2 Bedroom/1 Bath units. Original owner who had cats; reeks of cat urine.

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

We saw potential to add bedrooms and bath. With 1200sqrft to work with there is more potential in the property than just a 2BR/1BA. It has a half-assed carport conversion adding an unofficial 3rd bedroom. Our plan is to totally gut the house removing all the dated wood paneling, kitchen cabinets and bathrooms.

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

Found the deal on MLS. We were originally the 2nd place bidder. The first place bidder backed out after they discovered a gas leak on inspection. We didn't care because we were going to make the property all electric and capped gas lines.

How did you finance this deal?

All cash deal. Money for purchase and renovations came from previous BRRRR. We used cash out refinance to fund. BTW the cash for this property comes from a cash-out refinance of a 4-plex we purchased with 1031 exchange funds in September of 2019. The same capital has been cycled through two properties in a year. Gota love the BRRRR Strategy!

How did you add value to the deal?

We will rebuild as a 4 bedroom/ 2Bath with laundry. Since this is a bigger project than we have done before we plan on hiring a contractor to do the major work; demo, framing, electrical, plumbing, and sheet rock. My wife and I will do the finish work with new kitchen cabinets, new bath, flooring and paint. We have budgeted $60,000 and 6 months for the project.

What was the outcome?

We started off with a really bad contractor, the guy was literally a crook. From now on I run background checks on everyone I hire. We ended up firing him after he abandoned the job unfinished. Renovation took much longer than expected and cost more. I ended up doing a lot of the work myself to recover. In the end the deal turned out OK. We learned some valuable lessons and the place looks terrific. We have it all rented for more than I forecast.

Lessons learned? Challenges?

Painful lesson in dealing with contractors. Do a criminal background check before working with anyone.

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

Local agent Angela Kennedy