MONSTER HOUSE with HUGE ADD VALUE!

[Shanea Fulks]

Investment Info:

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

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

MONSTER HOUSE! This has been a more difficult turn for us. built in 1950 as a "Basement" house, then over the years it was built up and out by less than savvy builders. Horrible floor plan, and $140,000 in remodel
It is still a work in progress and we are learning lessons along the way. BUT, We never give up and we keep moving forward.
This house sat vacant for years because EVERYONE in town knew how it was built, and who built it. No one wanted to touch it!

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

*ADD VALUE* We transformed the home into TWO 3 Bedroom 2 Bath Rental Units. a second Commercial parcel contains an old mechanics garage. We plan to convert this into TWO 1 Bedroom 1 Bath Units. UNIT 1, LTR at $1800pm. UNIT 2, MTR completely furnished =$2400pm.
Garage Units, $1100 each if LTR if completely furnished $2000 each if MTR. Possible Gross Rents of either $6400 or $8200
THIS JUST MAKES SENSE

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

It was on the market for $279,000, they lowered to $240,000 then $200,000. I am an AGENT and I made an offer of $200,000 contingent on the inspection. I brought my contractor in, he formalized a bid breakdown. It included a complete remodel, roof, hvac, plumbing, electrical basically making it a brand new house down to the studs. We sent the bid to the sellers agent and negotiated down to $140,000! WINNING!

How did you finance this deal?

Hard Money for purchase, we put down 10%. We took out a HELOC of $165,00 from our primary residence, funding the remodel and paying off other debt to lower our DTI.
We are closing at the end of the month on a DSCR loan. 70% LTV of $445,000 and taking out the rest of our cash for the next deal.

How did you add value to the deal?

Making the home into TWO rental UNITS and the future conversion of the mechanics garage into TWO 1 bedroom UNITS.

What was the outcome?

Outcome as planned

Lessons learned? Challenges?

Contractors take WAY longer than they say they can do the work.
CRAZY things always come up and you need to be ready for the hidden surprises.
When you work in a rural town, bids are WAY higher and sometimes its less expensive to bring in subs from larger towns.
NEVER pay RETAIL! ALWAYS look for deals on local sites. For Example, Tile I wanted for the bathrooms 3.89 sq ft in the store, I found it on KSL/FACEBOOk MARKETPLACE, I got all I needed (150 sqft) for $50.00

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

YES the BEST! MEEEEEEE