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Updated almost 2 years ago,
Phoenix Duplex with basement buy and hold
Investment Info:
Small multi-family (2-4 units) buy & hold investment.
Purchase price: $325,750
Cash invested: $70,000
remodeled from bottom to top. Had a basement unit that just had a toilet and sink so I added a shower and kitchen. Lot is big enough to put two more units on it which I plan to do. Current market value has gone up to $450,000.
What made you interested in investing in this type of deal?
The property was zoned R-4 so I knew I could further develop the lot to add more units to it. It was a unique property with a basement which is unheard of in Arizona. The bones were really good and structure was well kept. I believe this part of Phoenix is the next up and coming area and over the next 5-10 years there will be a lot of opportunity here. You can already see the gentrification happening.
How did you find this deal and how did you negotiate it?
I found this deal on the MLS and it competed against multiple offers. I built a very good relationship with the listing agent to win this property. I did end up paying $45,000 over list price for this property and it was still to this day very worth it.
How did you finance this deal?
I purchased with hard money and then later refinanced to a 30 year conventional. I did not do a cash out, I plan to just open up a HELOC whenever I need to access the money.
How did you add value to the deal?
I completely gutted and remodeled the house.
The basement unit I added a kitchen and shower and remodeled as well.
What was the outcome?
I know have two long term tenants in both units that I am cash flowing $1000 per month on. I could possibly cash flow more however I have very good tenants so I would like to keep them there.
Lessons learned? Challenges?
I am still learning on how to develop the back portion of the land and add two more units. I overpaid a few contractors which was a lesson to be learned.
Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?
I was the agent on this transaction. I do have hard money lenders I would recommend for deals.