cashed out retirement acct to buy duplex

[Constance Chambers]

Investment Info:

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

Purchase price: $120,000
Cash invested: $54,000

brick duplex in Watkinsville, Ga. Highly desirable due to school system in Oconee, CO. GA and close proximity to UGA and North Ga watkinsville campus. inherited 10yr tenants that were paying 300 month less than market rents for area. renovations done on both sides, most on side B. plan to fence in backyard and rents go up again Jan, 2020. both side currently rent at 800 plus pet fees since Jan 2019. *will need new roof in 2020 @ 6k

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

Location due to school system, job opportunities and lack of affordable rental property in the county. Multifamily due to less vacancy and less cap expenditures.

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

I found it on the realtor.com MLS site. We offered 125k of 139, were the highest offer. appraisal came back at only 115k but we realized the value and came up with extra 5k out of pocket and settled on 120k

How did you finance this deal?

We had cashed out several retirement accounts...including an annuity. Took the tax penalties in stride knowing this was our way into investing. We still have retirement accts. as well, but now we are well diversified.

How did you add value to the deal?

new flooring (LVP), new cabinets on side B, new paint and trim, removed wall to create open floor plan on side B, newish appliances both sides and installed DW on side B. updated vanities and wall heaters. Placed W/D in both units to be competitive in the area. Adding privacy fence in Dec. 2019
charge monthly pet rents

What was the outcome?

rents increased to 800 each side plus pet rent, current ROI is around 14% side B, 11% side A

Lessons learned? Challenges?

stay on top of contractors and deadlines. offer incentives if deadlines are met. we can do alot of the work now ourselves and did most of the renovations on side A ourselves.
keep an active updated file easily accessible to send to the lenders with last 3 yrs tax returns/most recent pay stubs/ references/ debtors information (acct. number and address, pay offs) / copy of DL etc. ...to keep things going and to close quickly