St. Johns Value-Add Duplex

[Brian Knier]

Investment Info:

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

Purchase price: $350,000
Cash invested: $18,000

Value-add St. John's duplex purchased off MLS. Rents $900 per unit (3bd/1ba) when we bought. Self-rehabbed one unit, second unit remains unupdated with inherited tenant still in place. Now bringing in $3600/mo overall.

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

Purchased off MLS. Moved fast and made offer on day one. Seller had accepted a cash offer, but we had them keep ours as a back up. Cash offer fell through and ours didn't.

How did you finance this deal?

Conventional financing with mortgage broker. Did a cash-out refi with bank at lower rate a year later after value-adds and higher rents in place.

How did you add value to the deal?

Complete rehab of one unit to bring it up to marketable condition. New kitchen, new bathroom, new LVT flooring, new paint and interior trim. Was able to rent this 3/1 unit at $1900/mo. (had been $900). Raise rent for inherited tenant in other unit to closer to market.

What was the outcome?

Had a successful value add with first investment purchase that we BRRR'ed into down payment for our second duplex.

Lessons learned? Challenges?

Don't keep inherited tenants if you can help it. (Difficult in Portland today with relo laws). Match rehab upgrades to rental market grade not to homebuyer grade.