4 plex brrrr and fire damage

[MIlton Monzon]

Investment Info:

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

Purchase price: $173,000
Cash invested: $77,000

One of 4 units was burned for this property. Needed a total gut and everything done to it including siding, windows, sump pump. I bought it with the roof completed so that was a plus. Wholesale fee of 13k and a contractor scamming me. Tons of lessons on this one. 3/4 units were empty needing a full remodel. Got it done and now all fully rented and modernized. Expected a 260 ARV and the appraisal came back at 319k. Got all my invested money in and more to reinvest and still have cashflow.

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

I was intimidated by fire damaged properties but the numbers made sense and I took the risk. Def had a few anxiety attacks taking the leap. Turns out the biggest risk here was not the fire damage but the CON-tractors that stole approx 22k. Had they not I would have only used 55k of the 77k listed.

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

Wholesalers given to me from references. Biggest thing was networking and being the first one to be given the offer was a plus. Being an out of state investor having a well established team was critical. Luckily to start off I had that with my agent, property management, etc.

How did you finance this deal?

RCN capital was a huge help for this deal. Could not and would not have done it without them.

How did you add value to the deal?

Remodeled all units with LVP, stainless steal appliances, electrical, plumbing, and lunar paint throughout.

What was the outcome?

Tenants that met all the rental criteria, support from the community, debt paid out.

Lessons learned? Challenges?

This one is tough. The contractors that scammed me had already completely 3 other projects for me and did a fantastic job. I even took them out to dinner when I visited. I interviewed them, had referrals, checked their EIN and records, etc. At the end of the day I still got scammed. Then they did it to a lot of others in the same time frame.

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

Yes Brenda Engel from New London Ct, amazing agent and RCN Capital.

[MIlton Monzon]

Quote from @Malcomb Stapel:

@MIlton Monzon  nice work. I'd be interested in hearing more details about whatever scam the contractors pulled on you. (it always helps to learn from others peoples experiences)

Is RCN Capital a hard money lender? 

 @Malcomb Stapel. Thank you! Yes RCN capital is a HML. Have done 4 deals with them already since I began in September. Christine Naidoo is my go to. Yes feel free to reach out with any questions you may have.

Quick summary:  After building a relationship with them (so I thought) I gave them this bigger project.  Even though they had done 3 for me already I still interviewed various contractors for this rehab and my go to guys were giving me the best qoutes.  So I went with them.  Everything was going well, they got permits pulled, sending updates daily, etc.  I continued to see them posting their work and now others began reaching out to them.  

Ultimately they took in too many jobs and with my big project they pushed it to the side and got overwhelmed with multiple jobs.  I messed up by lowering my own rules and gave them almost 75% of the money before I can left confirm it was completed.  (I messed up by thinking I could trust them at this point).  So eventually they ran off with 22k worth of materials and work never completed and what was done was very poor workmanship.  

They completely ghosted me, lawyers said it would cost 5-10k to even begin the process, and the city continues extending the contractors listing on the city because if he replies to them within 10 days of initial contact they have to give him another 10 days to respond so apparently he's been responding on the 9th day even time lol.  Anyways I had to pay another 25k to another contract to finish this project and another that I will post later but that's pretty much what happened.