My 1st Knoxville Historic Remodel

[Cory King]

Investment Info:

Single-family residence buy & hold investment in Chicago.

Purchase price: $175,000
Cash invested: $100,000

My first historic remodel and I sure learned a lot. I expected it to initially take 4 months & $50k or so to quickly update and turn over. 11 months and $100k later we're wrapping it up. After diving into it we quickly discovered extensive termite damage not able to be seen on any inspections. That added around $30k in additional framing/foundation repairs needed. All new plumbing, electrical, hvac along with surface level updates. Thankfully we could also preserve many of the original features of this home. Worked out a cash out refinance where I was able to recoup a majority but not all of my invested cash, leaving about $40k in the deal which is ok with me bc I wanted to ensure a certain cash flow rate. Still yields a net 18.9% cash on cash ROI. Prior to purchasing in 2022 when rates were rapidly rising, I did underwrite this deal at upwards of $100k in costs and 9% interest and it still penciled out. Glad I did bc that's pretty much weee I ended up. Keeping as a student rental where I receive $3200/mo gross income.

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

I love historic homes and wanted to take on a project as an investment and learning opportunity

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

I had the listing originally. Traffic was a little slow as it was summer 2022 and rates were rapidly rising. Seller was an investor and motivated to move on from it so I made an offer to buy it myself.

How did you finance this deal?

Private money and my own cash

How did you add value to the deal?

Extensive remodel including new plumbing, electric, hvac as well as complete remodels of bathrooms and kitchen.

What was the outcome?

Cash out refi and holding for $1000/mo in cashflow as a student rental.

Lessons learned? Challenges?

Tons. My first historic project so I knew there'd be surprises. Didn't expect it be extensive termite damage, but it is what it is. My timeline was aggressive to start so next time I'll take things into account and plan upwards of a year to complete.

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

Self represented as an agent: loved working with Steve Levine as my private money lender locally.