Completed/Sold 2 Condos in Salem Massachusetts

[Eric Sullivan]

Investment Info:

Small multi-family (2-4 units) fix & flip investment in Salem.

Purchase price: $510,000
Cash invested: $330,000
Sale price: $1,350,000

This 2 unit property is located in one of the most desirable neighborhoods in Salem. Located across from the school, 3 houses down from the water, and a couple of minutes walk to the train. The property is perfectly situated for city buyers who can commute quickly to Boston. Our plan is to turn this into 2 luxury condos with off-street parking. The first floor will be a 3 bedroom 2 full bathroom layout with an open kitchen and living. The second floor will be a townhouse style unit consisting of 5 bedrooms and 3 full bathrooms. We ended up ripping off the back 1/3 of the house as it had rotted which we didn't know until we gutted the building. We ended up pouring a foundation and doing an addition to add about 1000 sqft and a roof deck. For the sale we ended up with a single buyer purchasing both units for 1.35m which 200k over our target number in underwriting.

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

The opportunity we saw by converting the building to condos.

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

This was actually on MLS. We weren't the highest offer but no inspection or mortgage contingency won us the deal.

How did you finance this deal?

Commercial loan 75% LTV

How did you add value to the deal?

Complete gut renovation + addition. We also jacked up the house about 2.5" to level off the floors. The property is next to the water so you had a lot of settling over the years we had to correct.

What was the outcome?

Both units were purchased by one buyer which I believe the rent out the 1st floor and live on the second. The units sold for 200k over what we underwrote off market. Essentially this property never hit the market for re-sale.

Lessons learned? Challenges?

We didn't plan on ripping off a third of the house and doing an addition, but as we all know you can't always see what is behind the walls. The stack going out the back of the house was never flashed properly for for 30+ years water had come in an rotted the structure.