Chattanooga Duplex Update

[Wesley Thompson]

Investment Info:

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

Purchase price: $110,000
Cash invested: $45,000

Closed 09/23/2021- Tenant occupied duplex with each unit currently renting for $650/mo. Property does need renovations but most will not be completed until units are vacated. 16% CoC, Return on Equity 25%

20 Mar 2022 Update - Fully renovated and placing tenant soon for $1600 mo. Cashflow at $522/mo which gives about 14% CoC return between mortgage and rehab loan. Working cash-out refinance to pull as much equity out as possible!

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

Want to gain experience with BRRRR strategy and investing out of the area

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

Found by agent, was technically off-market.

How did you finance this deal?

Conventional investment loan for purchase + rehab loan from my bank.

How did you add value to the deal?

Tenants were evicted after failure to pay for two months and then full renovation to the market area.

What was the outcome?

Working a cash-out refinance right now to pull out as much equity as possible while also having cashflow. Unfortunately working through a zoning issue (not actually zoned for a duplex even though it's always been one). Property manager found a single tenant for the whole property at $1600/mo whereas both units would've rented for $815/mo so we're not losing too much monthly income.

Lessons learned? Challenges?

Know the ARV - this property was difficult to comp, and while that's not the seller's problem it does calculate to risk for the buyer so that is a factor to consider on future deals.

Estopple - will NEVER purchase a tenant occupied property without one and will make due diligence contingent on it!

Zoning - know the zoning of the property and area. Just because a property is obviously a multi-family and is rented as one, doesn't mean it's zoned for multi-family (things change).

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

Adrienne Green - Auburndale Group

Gabe Whitmer - First Bank

Ashley Cross - Whitewater Property Management

Mike Cross - Trident Rehab