Duplex BRRRR Philadelphia Under $100k All In

[Samantha Miller]

Investment Info:

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

Purchase price: $83,000
Cash invested: $13,000

I purchased a small duplex last year - it has a studio apartment on the first floor which was vacant and a 1 bedroom apartment on the second floor which was rented for $600/month.

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

The numbers worked. The property didn't need too much rehab. Original asking price was $90k, the top 1 bed unit was already renting for $600 which was a little low, and the bottom unit I knew could also rent for $600. So at $1200 a month gross cash flow and asking under $100k with very little work to do made sense.

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

I saw it in an email from a wholesaler's distribution list. I emailed him for details. He wanted to take a sight-unseen offer as the seller was hesitant to have people walk through. He said he had a lot of interest in the deal. I offered $85k verbally, but then convinced him to let me send my contractor through. The contractor found a beam that would need replacing and a few other minor things, so I went back and told the wholesaler I could only do $80k. We settled at $83k.

How did you finance this deal?

Hard money loan with a little of my own cash to close the gap.

How did you add value to the deal?

Used a GC who repaired the one beam that needed work, did a little electrical and plumbing repairs, fixed a door jam, etc. Had another contractor remove a small tree and debris from the yard, and one more to touch up paint on the exterior. Overall spent about $13,000 (originally estimated $10k).

What was the outcome?

All in for about $96k: $83k purchase + $13k rehab. Took about 2 months total. Refinanced the hard money loan: appraisal came in at $125k, so I was able to pull back out $93k leaving only $3k (plus closing costs) in the deal.

Lessons learned? Challenges?

With this property and in general with lightly rehabbed properties, always anticipate more repairs to be done especially within the first ~6 months of ownership. After the first floor tenant moved in, there was a sewage leak in the basement and a couple other minor things came up. At that point the property had income coming in for both units so that does help, but I generally always warn people to just set aside another $5k for repairs even after you think rehab is done.

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

The hard money lender was Crowdcopia who I've used several times and would highly recommend. The title company was Prosperity Abstract who was chosen by the wholesaler, but I would also recommend because they are one of few title company's left in the area who know how to handle wholesale deals.