Scaling with 3x Distressed Duplexes BRRRR

[Nico C.]

Investment Info:

Large multi-family (5+ units) buy & hold investment in Norfolk.

Purchase price: $427,000
Cash invested: $100,000

Snapshot Metrics:
1% Rule = 1.34%
Purchase Price: $427000
Estimated Rehab Costs: $100000
ARV: $610000
Present Monthly Gross: $2320 (3 Vacant Units)
Projected Monthly Gross: $5750

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

We want to get into the multi-family space. This project is the first step in that direction - a proof of concept. The strategy is to keep the property preforming + offsetting our expenses as long as possible by renovating units, bringing them to market, and turning over the subsequent units. We learned from our mistakes on our previous post by having the property appraised prior to the renovation which brought back a value of 512k! We remain optimistic about our post-renovation valuation.

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

MLS

How did you finance this deal?

We are presently in pursuit of a good financing solution for this project, this seems like a great opportunity to apply commercial financing as we have six units on our hands (3 separate properties). Would love any feedback available!

How did you add value to the deal?

We are thrilled to be able to provide our current tenants with renovated + safe access to their units, updated interiors, replace ancient HVAC systems and bring their roofs up to standard. The previous owners had allowed certain key aspects of this property to fall into an UNSAFE level of disrepair. They also failed to provide their tenant base with a professional management structure.

What was the outcome?

This is our biggest project to date. We purchased the units all cash at $427k for a large scale (for us) BRRRR. That present cash flow is weak, but that's because the project is on-going and we are in the process of renovating, transitioning the wrong tenants out, and bringing the right tenants into our units. Once the project is completed, we expect to achieve $5750 in gross monthly rent + recapture 100% of our acquisition capital + 30% of our renovation capital.

Lessons learned? Challenges?

Utilizing some of the technological resources out there (shared calendars, project status updates, clear email chains) to keep all team members on the same page for this project has been key. There has just been so many moving parts from processing an eviction, discovering new problem areas, and bringing renovated units to market. We have a fantastic "Core Four" who made it happen!!

We are so grateful to be a part of this community, thanks for reading everyone!

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

Mary Kenworthy @ Stephanie Clark - REMAX Alliance = Property Management, Cole Fackler Rose & Womble = Agent, Hanger Law = Legal Support