First Hard Money Purchase and Major renovation

[Matthew Claeys]

Investment Info:

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

Purchase price: $639,000
Cash invested: $150,000

2 Duplexes on separate tax lots

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

Property was being marketed as a 4plex. It is actually 2 duplexes on separate tax lots. Property cash flowed, and ARV is $400,000 above purchase price, plus renovation costs.

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

Property was listed on MLS. Won multiple offer situation, and offered $132,000 over asking. Upon inspection, realized that properties were in need of major renovations, and was going to terminate. Offered Hail Mary addendum of $242,000 off the purchase price. Seller countered at $193,000 price reduction. We moved forward.

How did you finance this deal?

Hard money loan for purchase and renovation costs.

How did you add value to the deal?

Property was in pretty bad disrepair. Repaired crawlspace, and foundation. Replacing roofs, windows, doors, garage doors, repairing siding, renovating kitchens, and baths, replacing flooring throughout. Properties will be midcentury showpieces when completed.

What was the outcome?

Still own the properties. Still mid renovations

Lessons learned? Challenges?

Figuring out how to navigate tenant occupied buildings during renovations. Navigating tenancy terminations, in order to be able to complete renovations, and move towards permanent financing.

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

Represented myself for the purchase.