Listed as SFR, but turned out to be a 4-plex

[Keith Grayson]

Investment Info:

Small multi-family (2-4 units) fix & flip investment in Phoenix.

Purchase price: $115,000
Cash invested: $90,000
Sale price: $322,500

The Seller nor the agent ever we went to the property and listed it as a single family home. I drove it and discovered that it was zoned multi-family. It had a separate guest house that I partitioned off to turn it into a duplex. There was a total of 4 units after the conversion. Gross rents were $3,000 per month, and the new buyer kept me on as the property manager at 8%.

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

Margins in multi-family flips are much higher than SFR.

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

MLS
Listed at $139,000 for 18 DOM.
Offered $100,000. Seller countered at $115,000, and I accepted.

How did you finance this deal?

Private money loan

How did you add value to the deal?

Added a unit by dividing a large two bedroom into 2 studios.

What was the outcome?

Sold for $80,000 profit and retained property management agreement with new owner.

Lessons learned? Challenges?

Doubled budget due to delays with plumbing and foundation issues.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Me