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Updated almost 5 years ago on .
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1542 Quarrier Buy and Hold
Investment Info:
Small multi-family (2-4 units) buy & hold investment in Charleston.
Purchase price: $34,200
Cash invested: $32,250
Property located in the historic district of East End in Charleston. Purchased at auction for $31,000 plus $3,100 auction fee. Raised $36,000 from private investor, paid investor $4,000 after refinance. Lower unit was already rented. We started testing plumbing and utilities in upper units to find massive plumbing issues throughout the building. Put cash from other rentals into renovating the building, it's now completely renovated and rented. Recent appraisal $165,000.
What made you interested in investing in this type of deal?
Small multifamily in a great area of Downtown Charleston. Near the State Capitol and two nearby hospitals.
How did you find this deal and how did you negotiate it?
This was an on site auction. The lady that owned it was a tired landlord and was selling off her property through auctions because she didn't trust realtors. Highest bid takes the cake, only a couple other investors at the auction.
How did you finance this deal?
Raised private capital from a friend $36,000. Paid him back $40,000 in about 8 months.
How did you add value to the deal?
We thought we would be able to immediately rent the vacant units. That was not the case. As soon as we got a tenant in the upstairs unit, water leaks started occurring in the lower unit. We brought our best contractor in to evaluate the issue and he found galvanized plumbing throughout the building cracking. We removed all of this plumbing and replaced with PVC, installed 2 new hot water tanks, replaced all old gas lines, refinished original hardwoods, painted each unit, carpet, bathroom updates
What was the outcome?
When we found all these issues we actually had to bring another investor in to infuse money in the deal. We sold the property to a partner company which we share equity in for $60,000 to buy out the original investor and infused $32,000 for the repairs. Now we're in the property around $92,000. Recent appraisal came in at $165,000. We're actively looking to sell the property or refinance.
Lessons learned? Challenges?
Biggest lesson learned was to expect the unexpected. There was no way we could have know most of the plumbing behind the walls was bursting at the seems. Even by turning water on in the upper units upon original inspection we wouldn't have been able to see this issue until someone was actively living in the upstairs units bathing and flushing the toilet regularly. It was a bit scary at first, but we adapted and solved the issue. It's not a great cash flowing property.
Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?
This one was all on us from auction to renovations, we handled this project start to finish.
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