Creative Property Conversion

[Andrew Merritt]

Investment Info:

Single-family residence fix & flip investment.

Purchase price: $248,000
Cash invested: $280,000
Sale price: $559,500

My partner and I purchased a single family home with a detached garage on 3/4 of an acre. We subdivided the lot, fixed up the house, and converted the garage into a two bed two bath home and sold each one individually - $260k for the garage home and $299,500 for the regular home.

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

I've been wanting to get into heavier rehabs to allow for more opportunities in this tough market.

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

No negotiation, we paid asking price

How did you finance this deal?

Conventional mortgage, private loan, and self-funded

How did you add value to the deal?

We turned one lot into two and converted a garage into a home

What was the outcome?

Sold each home individually and made about $30k in profit. Not nearly as much as we had expected but at least it was positive.

Lessons learned? Challenges?

We relied on some poor estimates at first that encouraged us to pursue this project. We also had to deal with the labor shortage, which caused the project to take about five extra months and added to our holding costs. This was my first heavy flip as well, so some items were not planned out as well as they should have been up front.