11-unit Multifamily Rehab with Pics

[Karen P.]

We are almost at the two year mark with our first investment! In April of 2015 my husband and I purchased an 11 unit apartment complex with a duplex on the property for a total of 13 units.  The property was in distress and the owner did not keep records on her rent roll or any expenses.  Fast forward to today and it is 100% occupied with rents increased on average $105.  

I wanted to share a few of the rehab pictures of our property.  Some of the units had to have extensive work done, especially with wiring and plumbing.  The apartment building was built in 1950 and the duplex was built in 1930.  We tried to preserve the historical aspects when possible.

Pictures of our property on take over: No landscaping, brick exterior in excellent condition, but no curb appeal. 

We added landscaping and added red to the front door to add visual interest.

On some units we kept the retro finishes, but this one had damage to the tile and stains on the porcelain that couldn't be removed. We had several of the tubs professionally resurfaced.

We added new counter tops and new vinyl wood planking to the units.

An example of how we stage our units when leasing:

The duplex units are two bedroom two bath and turned out beautifully! They had hardwood floors underneath the carpet so we were able to have the floors refinished.

We have definitely learned a great amount from this first deal.  Taking this distressed property and turning it around has been exhilarating and scary but very rewarding.  Hopefully this can motivate and encourage a few of you out there!

[Karen P.]

Thanks everyone! Since the owner had no real bookkeeping on the property, we did owner financing.  We put in $64,000 of rehab.  The units were in bad shape and a good $100+ below market rents. Right before the owner sold it, she filled the apartment with tenants. Most of those left on their own accord once we implemented the new rules. We did one eviction.  

During the first year, even with 3-4 units empty at a time for rehab, we had positive cash flow and made a 10% ROI. Year 2 Income $86,000, Operating expenses: $32,000, NOI: $53,000, Net cash flow: $27,000 CoC return 13% . We refinanced and had 40% equity capture. We were then able to put our initial investment money into a 160-unit apartment complex.

Now that the majority of the large capital expenditures have been completed, this year will be focused on stream lining operating expenses, cutting costs where we can and raising where needed.  Our biggest expense on this property is the plumbing. It's an old building with cast iron pipes and teaching our residents not to flush every item imaginable has been a process! lol