Learning through losses

[Account Closed]

Investment Info:

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

Purchase price: $525,000
Cash invested: $30,000
Sale price: $335,000

SFR with a duplex behind it all on one APN. the SFR's garage was converted to a studio with a garage and a 1/1 upstairs.
When purchased at the height of the market, it was not disclosed to us that the duplex was not built with permits.
In 2014 we went to sell the property then found out the duplex was not permitted, when worked to get it permitted. Received proper zoning for multi rez, invested money, but then county wanted $40K for a side walk and outlandish other requirements.

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

cash flow to live.
When fully rented it was a cash flowing cow.

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

Terrible agent helped partners

How did you finance this deal?

Conventional

How did you add value to the deal?

remodels.

What was the outcome?

loss.
rather than risking having tenants in un-permitted structures we sold at a loss.

Lessons learned? Challenges?

Was a great learning experience to investigate permits of any additions or multi-family no mater how good they look. On the selling side, disclose disclose disclose disclose.