BRRRR Duplex in Lexington, KY

[Joseph Back]

Investment Info:

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

Purchase price: $35,000
Cash invested: $37,500

Brought this duplex back to life and BRRRed my way to another $250 per month in cash flow. When I purchased the property one unit was condemned and needed extensive renovation. I went in and replaced the roof and windows while also doing a gut cosmetic rehab on one of the units. After renovation was able to rent both 2bd/1ba units out for $625 per month and refinanced my entire $72,500 back out of the property and into my pocket.

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

I was looking for BRRR opportunities and knew I could bring this neglected property back to life while also creating another monthly cash flow stream.

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

I was specifically looking for more multifamily properties in my market and was cold calling owners of 2-4 unit properties in my market that had owned their property for at least 10 years. The lady who owned it had a nightmare tenant in one of the units who wasn't paying rent and tearing the property up so bad that it got condemned. I offered to buy it quickly and for cash and she jumped at the opportunity to get rid of this problem.

How did you finance this deal?

Used a HELOC on my father's personal residence to pay for the purchase price and all renovations.

How did you add value to the deal?

First thing we did was evict the problem tenant, luckily we were able to offer her cash for keys to speed up the process. Once she was moved out we replaced the roof and all windows on the property. After that we did a full gut job rehab on the condemned unit including new cabinets, counter tops, appliances, shower, vanity, toilet, light fixtures, plumbing fixtures, refinished the hardwood and put LVP in bathroom/kitchen and finished it up with a fresh coat of paint.

What was the outcome?

We were able to get the property fully rented at $625 per month per unit ($1,250 per month total). After getting it rented we got a cash out refinance loan from a local bank for $75,000 to pay ourselves back. Terms were a 5/1 ARM loan with a 20 year amortization at a 5.25% interest rate.

Lessons learned? Challenges?

Learned to always try cash for keys instead of an eviction because it is usually cheaper and definitely quicker.