BRRRR in Galveston, TX

[Wes Foster]

Investment Info:

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

Purchase price: $180,000
Cash invested: $42,000

This is our first investment property. I primary residence with a duplex in the back. We are completely renovating every unit. Taking the primary residence from a 3 to a 4 bedroom, adding HVAC, new open floor plan, modern kitchen and bathrooms as as well as adding massive walk in closets in two of the four bedrooms. Duplexes in back need a complete over hall all the way down to the studs. They will get a complete remodel with new kitchens and baths. New flooring and fixtures throughout.

Below are the before images of the primary unity and the duplexes out back.

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

The duplexes in the back already had faithful, long-term tenants in place. To be able to pick up 3 cash flowing doors on one single family property was an incredible draw. The primary residence was in bad shape. After some research we discovered that this was an inheritance house and the relatives didn't want much to do with it. We knew that if we could get it for the right price, we would have a diamond in the rough.

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

I found this deal through an off-market facebook group. A brokerage that specialized in distressed properties had it listed. We knew that their contract ran out in 2 days so the brokerage was in a place to negotiate as well. Asking price was was $220k. But with where we believed the ARV was we had to get the property much cheaper. I contacted the broker and let them know that our offer was low, but they insisted we submit. We came in at $173k. After negotiating back n fourth we settled at $180k.

How did you finance this deal?

We used a hard cap lender that financed the purchase as well as the rehab loan. The property needed extensive renovations - our budget is $115k.

How did you add value to the deal?

We are remastering the entire floor plan. Adding a 4th bedroom and two massive walk in closets. We are relocating the kitchen and giving both bathrooms complete remodels. We are also redesigning and updating both bathrooms. We are also adding HVAC to the house. Since 1931 this house has only know open doors and window units.

What was the outcome?

Still in process. We are about half way through or renovations. After three months we will be able to cash out refi .75 and pull out all of our upfront money less about $4.5k pending final appraisal.

Lessons learned? Challenges?

We didn't know how the refinance laws worked in Texas. Learning about the 6 month and 12 month "seasoning" periods really threw are wrench into our plans. We are currently examining our options.

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

Yes, Kai Lai the buyers agent at New Western was incredible to work with, highly recommend.
Justin Renner at Quick Lending was also amazing.