Direct mail campaign lead to off market sale of small tri-plex. Worked to remove non paying tenants and then spent 6 months renovating property. Performed a majority of the work myself. Property has gone from being a bad apple to a clean and comfortable place to live. First property I have been able to purchase and renovate with all cash generated from cash out refinances on previous properties. Expect property to appraise between $350-$400k and cash flow $1,000 a month after securing a loan.

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

Stick to what you know. This is the type of investing I am familiar with and has worked for me. Every project get easier as I know what to expect.

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

Sent personal letters out to owners in this specific neighborhood. Targeting multifamily properties that are in need of maintenance.
Received response from owner and a price they would sell at. Didn't negotiate price just terms.

How did you finance this deal?

Purchased all cash that was generated from doing cash out refinances on two other properties I had previously purchased and rehabbed. Was able to take advantage of low interest rates and lock in favorable 30 year conventional loans. In addition I was able to take some of the cash out proceeds and pay off a third commercial property to own it free and clear.

How did you add value to the deal?

Full rehab, bringing units down to the studs. New plumbing, electrical, insulation, sheetrock, paint, finishes. Painted exterior.
It was a big project but straightforward as all the units were existing and separately metered. Project was made easier with the structure being single story and relatively small. Also access to the front and back of the property as well as the subarea and attic made renovations that much easier. Definitely things to consider when purchasing a property to renovate.

What was the outcome?

Overall a successful project with value added, improving the neighborhood and providing affordable housing. I am proud of how I was able to keep the project cost down without cutting corners.

Lessons learned? Challenges?

I am not sure paying all cash for the property and spending my savings on renovations was the best strategy to use. I don't feel over leveraged borrowing 70% of APV from my other properties that still have a healthy cashflow but just think there is always a better way if you can use other peoples money or owner financing. I think it worked for me as I only go one project at a time at this point. At a minimum it will be a 20% return which won't get all my money back out but close.