Duplex Conversion - The Dalles, OR - 2019

[Nate Bell]

Investment Info:

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

Purchase price: $161,000
Cash invested: $180,000

Converted this 2200 SF 1950's ranch into 2 units- upstairs and downstairs. Last owner let renters destroy it. Full remodel. Financed through a Homestyle Rehab Loan. Rehab took approximately 8 months. Rented both units within 5 days, $1500/mo upstairs, $1200/mo downstairs.

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

It's hard to cashflow in this region, and this how with a large unfinished basement presented the opportunity to add a second unit.

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

It had been on the MLS for several months, was really ugly, and had terrible pet odors. Asking price was $190K, which was what they needed to pay off the mortgage. I offered $165K, and the bank agreed to a short sale. Did a sewer inspection and found it totally collapsed, so got another $4K off the price.

How did you finance this deal?

Homestyle rehab loan with 20% of the total cost down. This is like a 203K, but for non-owner-occupied. Was told that the $180K Homestyle loan was the largest the lender had ever done.

How did you add value to the deal?

Added a 2 bed/1 bath unit in the basement. Full remodel upstairs and on the exterior as well.

What was the outcome?

Rented quickly, and am planning to hold long term. Strong rental demand in this town. Cash flowing ~ $800/month after PITI, cap ex, and vacancy.

Lessons learned? Challenges?

Remodel went way over budget, and this wasn't my first one. It's a continual learning process with big remodel jobs. I guess I learned that I shouldn't be a flipper!

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Jorge Barragan, Real Estate Agent, Columbia Gorge Real Estate
Lisa Ellard, Mortgage Specialist, Umpqua Bank