Triplex Conversion in NJ

[Mike Bonadies]

Investment Info:

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

Purchase price: $141,500
Cash invested: $3,000

The Deal: This was a triplex that was formally a mixed use building that was formerly a train station. We picked it up from a landlord who acquires properties through tax liens. We got the deal because he had done business before with us and he knew we could close and do an easy transaction.

What Made It Interesting: There was a value add opportunity with under market rent and by filling one of its vacant units (two were occupied at acquisition) but that wasn't the most interesting part. In this township there were no triplexes recorded. The property was technically a mix-use quadplex. This created some risk as we would have to get the township to view the property as a residential triplex despite no triplexes existing in their zoning codes. It was a good opportunity to work with the township and show them that we would bring value to the community by improving the properties.

The Financials: We used hardmoney to purchase the property and a private money lender to partially pay for the down payment. We provided them a guaranteed 8% return on their money and a one year bubble promissory note. The ARV shook out to be $218k and we needed to put $15k into the building. Luckily the rehab went smooth and fast and we were able to refi this very quickly and payback our hardmoney lender and private investor with interest only being a few thousand dollars out of pocket for some very good cashflow.