Tear Down to Total Beauty

[Rachel Chwaszczewski]

Investment Info:

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

Purchase price: $50,000
Cash invested: $150,000

Took existing dilapidated quad plex and stripped it down to the studs. We reworked the floorplan to become more efficient and to allow for more bedrooms in each unit. We ended up with (3) 2 bed/1 bath units and (1) 3 bed/1 bath unit that is in a area that is growing rapidly in a highly desirable location.

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

Investing in multi family properties are a good way to build a portfolio quickly as it lends itself to buffering income wise. If a tenant does not pay it is less impactful since the other units will cover the spread.

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

Property was offered to us from a person we had bought homes from previously and we have a working relationship with them.

How did you finance this deal?

Purchase property cash and took out hard money loan to fund the rehab portion.

How did you add value to the deal?

By gutting it down to the studs and reworking the floorplan of the units to be more efficient and cohesive we were able to add tremendous value along w/ the finishes that were chosen for mass appeal and longevity.

What was the outcome?

When the project was completed and rented out we refinanced into a perm loan and due to new appraisal value and equity position we were able to recoup the cash outlay we had into the deal and take a bit of extra cash to help continue to fund our investing.

Lessons learned? Challenges?

The most valuable lesson learned on this deal was having a good working relationship with local inspectors and zoning is immensely important when trying to renovate older properties. The city required us to bring the 1940's home up to code but since it was virtually impossible to retro fit to current standards we worked in conjunction w/ local inspectors to devise a plan that met code and their requirements w/o it breaking the bank!

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

This was an off market deal. We used our go to lender MoFin!