100 y/o house converted to triplex converted back to a house!

[Rob Thompson]

Investment Info:

Single-family residence fix & flip investment in Memphis.

Purchase price: $50,000
Cash invested: $190,000

I bought this 2,000 SF house, built in 1929, as a rental property a few years back. It had been converted to a crummy triplex at some point in the 1960s, with separate electrical and gas. After holding as a rental for a couple years, I began the process of converting it back to single family in the fall of 2018, either to sell or keep as a short-term rental.

Peeling back layers of the onion as we started renovation revealed quite a bit of structural problems, and it ended up being the most intensive remodel I've ever done. As of the time of this post (January 2019), all structural work is complete, a new roof is on, exterior siding (1920s beveled cypress) repair is nearly complete and trades are set to begin next week. Once complete, this house should be worth $330,000, so barring any unforeseen budget overruns, we should still come out in the black on this massive renovation project. Best of all, we will have taken the worst house on the street and converted it to one of the nicest.

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

I love fixing up ugly old houses and making them beautiful and something a family would love to live in. Sometimes, this makes me a glutton for punishment (like this deal), but it almost always ends up with a beautiful house at the end!

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

A realtor brought this to me as a rental triplex.

How did you finance this deal?

Originally I paid for it with bank financing as a rental property (on a 5/15). When we decided to renovate and convert it back to single family, I took out a construction loan and paid off the original loan.

How did you add value to the deal?

This is a total gut job, down to the studs, which allowed us to make the badly needed layout changes to convert this back to a single-family house, but updated for a 21st century family. We added beams to create an open floorplan living room and kitchen space, a master suite and added two bedrooms and a large utility room upstairs.

What was the outcome?

To be determined! We are still in the midst of renovation but trades start next week and budget looks good.