Adding 50% equity: 4 townhomes

[Rayce Barnes]

Investment Info:

Small multi-family (2-4 units) other investment in East Wenatchee.

Purchase price: $140,000
Cash invested: $450,000

Started with a raw piece of land
Built a town home style duplex
Refinanced out the money to build another

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

Available land in a neighborhood and I wanted to do a new build acting as GC

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

Found a raw piece of land and made a market value offer to the owners. They financed the land for me at $140k

How did you finance this deal?

Seller financing; $140k on a 5 year term

How did you add value to the deal?

I built 2 townhome style duplexes side by side.

What was the outcome?

Total invested/loaned was
$140k for the raw land 2017
$200k for the first duplex 2018
$250k for the second duplex 2019

ARV $950k which added approx. $360k in equity

Current value is $1,600,000 if a 6% cap is used. (But that number seems crazy)

Current rents average $9,600/month
Current expense average $1,600/month

Lessons learned? Challenges?

Lots of quotes and vetting subs. Not all subs are created equal. This is painful the first time, but once you have the relationships it’s cake.

Ex) best craftsman I’ve ever met charges $75 to hang a door and it’s perfect and takes him about 15 minutes. His efficiencies and skill has made his low price very lucrative and he’s always busy. (These contractors exist)

All the other contractors charge up to $200/door and may do a terrible job and take an hour or more.