Updated over 3 years ago on . Most recent reply
First ever gut renovation
Investment Info:
Small multi-family (2-4 units) buy & hold investment.
Purchase price: $38,000
Cash invested: $125,000
Uninhabitable 2-family, we gut renovated it over the course of 6 months with new everything. It has been rented by the same two tenants ever since.
What made you interested in investing in this type of deal?
I was looking to get into my first gut remodel. After doing a small commercial apt building(5- units) I decided to take a step back and see if I could add value by getting into projects that were intimidating other investors at the time.
How did you find this deal and how did you negotiate it?
The listing was for 52K, I was using the agent that helped me close on my first to deals and who I leaned on heavily for advice. He recommended I get every single quote from all my trades and submit my remodel budget with my offer. I believe the property was taken by the state in the passing of its owner, I don't remember the specifics but I know we needed to justify they price. We submitted everything as if it were going to a hard money lender(as is, reno, arv), and they accepted 38k.
How did you finance this deal?
Cash, at the time I was not working with any asset backed lending company and I couldn't interest any local banks due to my lack of experience and the high risk inherent in the project.
How did you add value to the deal?
We put 100K into the building. Everything was ripped down to the studs, slight floor plan adjustments, then new everything: Electrical, plumbing, HVAC, drywall, floor, trim, etc.
What was the outcome?
The building originally appraised at 155k in my first refinance, and later appraised at 200k in my most recent cash out. Currently the original tenants from my first infill are still occupying the units.
Lessons learned? Challenges?
Learned that I knew nothing about being a GC. I just worked through the problems by grinding away each day, this was inefficient and frustrating, but did lead to massive growth in understanding of building systems. If I could go back to my earliest projects, I would've spent more time looking for a good GC and learning from there execution before jumping in on my own.