Triplex gone south - heck of a ride in Lisbon - Portugal

[Pedro Diogo]

Investment Info:

Small multi-family (2-4 units) fix & flip investment.

Purchase price: $220,000
Cash invested: $237,000
Sale price: $715,000

This was a heck of a ride.
It was our first triplex Fix&Flip property. We purchased the property as a whole and made it in 3 different units.

Asking price - 270K
Purchase price - 220k
Financed 80%
Downpayment - 44k
Closing costs - 12k
Original Rehab cost - 140k
ARV - 725k

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

The possibility of added value transforming one single property in 3 different and independent units

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

online

How did you finance this deal?

We took a traditional loan to fund 80% of acquisition, put 20% of our own money and raised private money to fund the rehab.

How did you add value to the deal?

It was a full renovation, we added value by transforming one property in 3 different units, used up the attic and added private parking and landscape.

What was the outcome?

Rehab planned time was 6 months. 2 weeks before the project was due we were missing 24 windows, 11 doors, 3 gates, 3 kitchens, HVAC installation, electrical, paint and ... the contractor!
We found out our contractor had used up all the money somewhere else and he was nowhere to be found.
We had already sold 2 units and buyers had their lease contracts due in 2 months.
We were totally caught up off guard since this contractor had always been super helpful and professional until up this moment.

Lessons learned? Challenges?

- never be in a position of need
- pay as less as possible upfront and negotiate payments after completion of works
- inspect the expected
- do not be afraid of being cautiously wrong
- have better systems in place
- do not over leverage and have cash reserves to meet investors obligations
- always have at least one exit strategy

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

no