First Property, Bedford VA Duplex!

[Jacob Price]

In an effort to up my BP posts, I want to start documenting my first duplex purchase. So here we go...

I want to preface this post with my almost deal. My original first deal was going to be a much bigger apartment complex that I had found. It was 10 units and the rents were low. We were going to be able to increase all the units by about 50$ or so, based off the market in that area, which would have made the property bring in a little over 40k grossly and based off their expenses, which were 11,086.44, the net profit would roughly be 29k. This isn't including any mortage on the property, but the returns looked pretty decent considering it was 200k. The individual pushed for less than a week for closing and as it was our first deal I wanted to check out more on it before closing. Anyways, it was a blessing in disguise. Here is the deal I ended up with. 

Enter Dumpy Duplex

The deal

After a few months of looking daily I found a duplex that was in a nice area, but was for lack of better words, a big turd. I went and did a drive by, then contacted the listing agent to get a walkthrough. At the time the lower unit was rented, and it wasn't a good situation, let's just say I didn't want to inherit the tenant. I brought my partner with me when we met with the agent. My partner, who is my father, is a contractor that I had worked with since I was able to hold a hammer, he also was able to assess what all we were going to need to repair and actually was pretty good at estimating costs as it turns out. The property was initially listed for 79k, but after only a short period was dropped to 63k. I am a numbers guy, so I ran the numbers and came up with 50k as where we needed to be to have a good deal. My parents had their doubts about the offer, but that didn't stop me from offering it, and well it turns out that the sellers were in a terrible situation and accepted the 50k offer.

Closing: March 3rd

After closing we had paid 50,333.39.

We had a few major changes to the property that we anticipated and have almost finished.

So far our renovation has consisted of: 

• New windows
• Siding
• Converting from Baseboard/furnace heating to central air
• New Roof
• New electrical
• Almost all new drywall
• Re-did some old plumbing to pvc
• Converting both apartments to 3 beds

There will be more, but this is what we have accomplished since our purchase. I'm very grateful that we have been able to get great deals on a lot of what we have done. So far the renovation has cost about 24k if I round up. We still have probably another 6k to go. 

Financing

Briefly I'd like to talk about how I was able to finance this deal. We were able to use equity from my parent's home to completely finance the deal. We went in half and half, granted they obviously have helped a little more than half on the financing end. Our bank will give 80% of the ARV, so in 5 months from now we will refinance the duplex and get their cash back. We originally set a budget of 25k, so everything over that we have agreed to pay out of pocket.

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I will have more to update this soon, but current outlook is to be done sometime in May. I actually may already have the tenant for the lower unit, which is great! The outlook based off the market and other renters in the area I have spoken to is that we will get 700$ for the lower unit which is slightly larger and 625$ for the upper unit. Both units actually come with a storage building, both of which are insulated and have electrical. The tax assessment, which is actually based off a single floor according to the court, is actually 73k. Insurance covered us for 190k replacement cost... We expect ARV to be about 120k+ being conservative after we are done.

We have put 15+ hours in every weekend, but it's been a blast to learn and dive in. I will try to keep this updated, and I probably will have to edit this post at some point as I kind of rambled, but I just really wanted to get started on hopefully what will be one of many BP posts! 

Also, as a side note tip for those Lowe's shoppers. I can't even tell you how much we have saved by using coupons we bought on ebay, 50$ off after 250$ etc. I'd highly recommend you check them out if you use Lowe's as your primary go to for building supplies. 

Thanks!