A long and tedious project brings results...

[Bianca Bazil]

Investment Info:

Single-family residence buy & hold investment.

A complete gut renovation that resulted in a 4 bedroom (2 suites - one up and one down), 3 bath, and a bonus room. The plan is to also add an ADU, replacing an existing workshop.

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

New there was the potential for substantial appreciation in a highly appreciating area, as well as the potential to add an ADU which is being discussed and planned.

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

MLS listing that was going stale. The owners were pretty firm but everyone considered it to be a tear-down, I saw it's potential.

How did you finance this deal?

Bridge loan for the rehab that was rolled into a rental loan.

How did you add value to the deal?

Was a legal 2 bedroom/1 bath with illegal add-ons and what I considered an inside outhouse. The 2nd floor had less than 6' ceilings and stairs that weren't to code. We raised the roof, created a large suite with large bath and huge closet and a bonus room. The first floor also rebuilt the previously illegal addition, raised the roof to feature another suite with french doors leading to a new large deck. The kitchen was reconfigured, enlarged, and opened to the front of the house.

What was the outcome?

Was able to cash out refi to reclaim investment and left with a cash flowing asset. Will also be performing a cost-seg to further profit from this property.

Lessons learned? Challenges?

Lots of learning, misunderstandings with the contractor, and unbelievably long process. Learned that we need our own teams in place and need daily updates from crew and a push for completion. There were weeks when no one was working on the project.