Full gut reno on a duplex purchased for $12,000

[Brooks Gagnon]

Investment Info:

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

Purchase price: $12,000
Cash invested: $84,000

Up and down duplex. Small yard with some off street parking. Full renovation was done at time of purchase. Great cashflow and equity.

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

Cashflow and equity build

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

This property I saw a "lease to own" sign in town. Tracked down the property and the owner. Contacted them directly, at which point they gave the access code, as it was unoccupied and in very rough condition. Turned out they only wanted $30k, but they were not local and had no idea of the condition. After explaining to them how bad it was, I offered $10k and they countered at $12k. Extremely rare deal, even in 2016.

How did you finance this deal?

Despite the low purchase price, it was in need of a complete gut reno, so I was able to source some private funding from a local couple who loaned the funds through a self directed IRA. 6 months later, the property was 100% rehabbed and rented, at which point I refinanced into a conventional loan thanks to having plenty of equity right away.

How did you add value to the deal?

This property was in extremely bad shape. Hole in the roof, in disgusting condition, and nothing functioning. So we gutted the whole building to the studs and rebuilt everything. Electric, heat, insulation, windows, drywall, flooring, you name it. We also took advantage and vaulted the ceilings in the upstairs unit, really increasing the desirability.

What was the outcome?

In the end, I have a great cash flowing building with no headaches since everything is brand new, as well as great equity, which is currently around 3x the original investment.

Lessons learned? Challenges?

Lesson learned was to always be on the lookout for the next deal. You never know where it may come from.