Second half of townhouse now owned by us

[Richard J. Kalnitz]

Investment Info:

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

Purchase price: $115,000
Cash invested: $71,114

Triplex with two units rented and third unit being rehabbed.

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

Multi-family and BRRRR. The units are under market rent and need rehabbed giving plenty of room for forced appreciation.

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

The agent that helped us purchase the other half of the townhouse called us immediately when the listing came through. We negotiated it down due to current condition and the fact that the owner was out of the country and needed a quick sell.

How did you finance this deal?

Montage for investment property through a conventional bank.

How did you add value to the deal?

We are still in the process of this as the city has been a little difficult to work with. The third floor apartment was occupied by a hoarder and had some issues. As a contingency of sale we required this unit to be vacated. We immediately started the rehab of this unit only to have the city inspector say that the bedrooms were too small and the bathroom celling was not to code. We have a modification filed. We also tuckpointed the entire building and are putting on a new roof.

What was the outcome?

We are still in a dispute with the city on the third floor unit but after speaking with a lawyer we expect to win that issue. The building is still being worked on but recent comps in the area seem to indicate we are in a good place financially. Several other building right next to us have been going through rehabs as well and the whole neighborhood is really looking nice.

Lessons learned? Challenges?

The biggest lesson learned would be the issues with the city housing inspector. When he stated that the third floor apartment was not rentable I was ready to pack it in and sell it. The restructuring he said would need to happen was way out of budget. The inspector did admit that there was a variance on file for this unit but he stated it no longer applied. He also said there was no grandfather cluse. Talk to a lawyer, he was wrong on both account and we pointed that out. Most issues are now sol

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

Yes. Mike Kilcoyne
Keller Williams Midwest Partners
(563) 231-1841 mobile