Studs down Buy and Hold Duplex in KCK

[Darel Ison]

Investment Info:

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

Purchase price: $100,000
Cash invested: $105,000

This one was my BRRR from hell! Beware that in KCK, the county zoning and tax assessor do not talk. I purchased this originally because it was listing on the tax assessor records as a Triplex. It had however been operating as a duplex for the last 8 years. Just as my contractor was about to start getting the 3rd unit up and running a neighbor came by and told us that the building lost it's zoning as a triplex and was a non-conforming duplex now. After some verification with zoning, we found this to be true.

This threw a large wrinkle in my plan to rehab this and increase the value. But I did not quit. Instead I pivoted and asked zoning and permits if I made the 2 sides of the duplex larger, by making them both upstairs downstairs units, would that work. They said yes, so we fully permitted all the work and ended up doing a down to the studs remodel.

I ended up putting about 185k total into this, with the lending, and it only appraised for 200k after we were done, but the cashflow is nice and I was basically at break even when I refinanced it. In the end, I took two 2bed/1bath units, and made a 3/2 and a 4/2. Rents went from a total of $1,350 a month to $2,200 a month.

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

MLS Deal, Got the sellers to drop from $120k to $100k

How did you finance this deal?

Construction loan with LendingOne, then a refinance with LendingOne

How did you add value to the deal?

Studs down remodel. Transformed two 2/1 units to one 3/2 and one 4/2

What was the outcome?

Great longterm rental property

Lessons learned? Challenges?

Call the county zoning department on all deals