Duplex renovation: Worst for the first

[Rayce Barnes]

Investment Info:

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

Purchase price: $30,000
Cash invested: $90,000
Sale price: $180,000

3 plex completely remodeled into a duplex.

First deal. Had no idea what I was doing. Started a construction company. Hired a bunch of guys. Spent way to much money. Should have burned this one to the ground. Very great-full the market was in my favor.

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

I was told to get into real estate. I knew nothing. Cheapest house I could find.

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

Saw a for sale sign. Owner was an agent. Met him on site. Verbally negotiated him down $5k to the accepted price of $30k-ish.

How did you finance this deal?

Cash

How did you add value to the deal?

Total renovation. Insulation, Sheetrock, electrical, plumbing, heat, cabinets, bathrooms, kitchen, appliances, roof, windows, paint, landscape, etc

What was the outcome?

Break even at time the renovation was done. So held onto it and rented it out for a few years. Sold for a profit. I actually think I sold for closer to $160k.

Did a 1031 exchange as the down payment into an 11 door purchase between two adjacent properties.

Lessons learned? Challenges?

I think I learned everything in this deal. I started a new construction company. I Never had any previous construction experience or training. And it was a complete down to studs renovation. I hired 12 people immediately that also had no idea what they were doing. I did a lot of YouTubing that summer. Had one person that said he was a Forman…. I still don’t believe that. Once I finished this deal I knew I could do any worse. So I tried again.

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

Absolutely not.