6 Unit BRRRR in Virginia Beach/Norfolk Area

[Nico C.]

Investment Info:

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

Purchase price: $427,000
Cash invested: $138,000

Snapshot Metrics:

1% Rule = 1.34%
Purchase Price: $427000
Estimated Rehab Costs: $140000
ARV: $610000
Present Monthly Gross: $2320 (3 Vacant Units)
Projected Monthly Gross: $5750

This is our biggest project to date. We purchased 3x Duplexes in very distressed condition , all cash at $427k, for a large scale (for us) BRRRR.

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

We are trying to scale! It's time to move into multi-family! We were struggling to see the value add we wanted in the SFH space. There is so much more room to add value in multifamily.

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

We found this deal on MLS and negotiated by taking advantage of its distressed condition.

How did you finance this deal?

All cash purchase! Since these are duplexes on three lots - we hope to leverage conventional financing for the most favorable terms available. We are not quite ready to refinance as renovations are on-going and we don't have the tenant base established to validate our value add. Some of our units are available now, but others still have tenants transitioning onward. Those will be the next ones we rehab.

How did you add value to the deal?

This has been a big undertaking. We replaced roofs, refinished the interiors, repaired staircases to top units in order to make them safe for usage - they were in horrible + unsafe condition upon purchase. We also replaced and elevated all HVAC units to protect them from the flood zone. We are shooting for 40% increase in rents across the board which will yield the awesome refinance value we want.

What was the outcome?

The property is still being renovated, though we have three units available now for rent. We just got our first new tenant application yesterday so we are excited for that outcome! Time to start seeing the fruits of our labor - a lot of labor. We had one cash for keys situation on this deal, one tenant disappeared with all of her appliances (but not her security deposit woohoo!), and we are presently bringing those two units up to our standard. This project is on-going so stay tuned!

Lessons learned? Challenges?

1x Eviction/Cash for Keys Situation
1x Disappearing Tenant
1x Tenant refusing to pay her rent for the final month she is with us, eviction initiated