Strategic Buy & Hold with ADU Potential in Morganton, NC

[Mitchell Coles]

Investment Info:

Single-family residence buy & hold investment.

This single-family property, acquired in June, is a key piece of a visionary development in Morganton. Renovated with cosmetic updates for immediate rental income, it offers strong cash flow while preparing for more extensive repairs and the addition of an ADU. Positioned near land we own on West Concord Street, which is slated for a major development of 12 patio homes and two duplexes, this property is central to a broader strategy of enhancing value and transforming the area.

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

I was drawn to this deal because it aligns with my strategy of combining immediate rental income with long-term development potential. The property's location in Morganton, a growing market, and the opportunity to add an ADU made it an attractive investment. Additionally, it fits into my broader vision for the area, which includes developing adjacent land into 12 patio homes and two duplexes, creating a cohesive and profitable portfolio while enhancing the local community.

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

I found this deal through my local real estate network, which alerted me to its potential as part of a larger development opportunity. After assessing the property and its proximity to other investments in my portfolio, I negotiated directly with the seller. By highlighting my ability to close quickly and my plans to enhance the property's value, I secured favorable terms that fit my investment goals while laying the groundwork for the broader development project.

How did you finance this deal?

I financed this deal through a private lender, which provided the flexibility and speed needed to close quickly. This financing approach aligned with my investment strategy, allowing me to begin cosmetic repairs immediately while planning for the addition of an ADU and the broader development of the surrounding area. The private lender's terms supported my timeline and cash flow goals, making it an ideal solution for this type of investment.

How did you add value to the deal?

I added value to the deal by completing cosmetic repairs, allowing the property to be rented quickly and generating immediate cash flow. This provided interim income while plans for more extensive renovations and the addition of an ADU are underway. Additionally, the property is strategically positioned within a larger development vision, which includes building 12 patio homes and two duplexes on adjacent land, further increasing the long-term value and income potential of the investment.

What was the outcome?

The outcome has been promising so far. The property is generating rental income after completing cosmetic repairs, providing steady cash flow while plans for more extensive renovations and an ADU are in progress. This property also plays a strategic role in the broader development project for the area, which includes 12 patio homes and two duplexes. The investment is on track to significantly increase in value and contribute to the long-term success of the portfolio.

Lessons learned? Challenges?

Planning for potential infrastructure issues is essential, especially when dealing with properties that may need upgrades like connecting to city utilities. One significant challenge was navigating a septic issue and transitioning the property to city sewer lines. The process required coordination with local authorities and additional time and expense, but resolving it added long-term value and functionality to the property.