Duplex Purchase - 100% Financed - In Progress

[John Boychuk]

Investment Info:

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

Purchase price: $91,000
Cash invested: $1,760

Duplex in the 14609 zip code; one of the hottest zip codes in the country (PRE-RONA). 2bd/1ba upstairs apartment atleast $200 under market rent (monthly). 1bd/1ba downstairs apartment atleast $45 under market rent (monthly). Detached two car garage in rear.

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

Property is in a great area that is still on the rise, at-least pre-RONA. Property is worth ~$145k based on comps in the area. Needed ~15k in rehab.

After refi cash flow of the property is ~$405 budgeting for maintenance, capex, repairs, vacancy, etc. I'm very satisfied with the returns in this neighborhood.

This was my first deal where the entire purchase was financed by a private lender.

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

Property was listed on MLS with asking price of $110,000. Property was under contract for $120k IIRC, which fell through. The upstairs apartment needed a full rehab (~8k) and the roof needed to be repaired or replaced (Est. 8k, completed for ~$3k). Potential buyers were nervous about dealing with the upstairs resident as his rent is seriously under market and the unit needs complete rehab.

How did you finance this deal?

Private lender financed 100% of purchase. I paid closing costs and am funding the rehab.

How did you add value to the deal?

Garage rented $135/month
Upper unit will be re-rented post rehab for $850-$900/month ($625 current)
Lower unit will be renewed at $695 ($650 current)
Rehab of upper unit will increase market value of property from 91k to ~145k

What was the outcome?

To be determined. I closed on the property right before Covid-19 hit. This has affected the upper unit rehab as the current tenant was searching for a house to buy; current restrictions have halted that process. Originally expecting the current tenant to be moved out by 5/30/2020, however, the current move-out date is unknown.