Multi Family Auction.com

[Scott Stephens]

Investment Info:

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

Purchase price: $175,000
Cash invested: $85,000

10 month re-hab and conversion of a single family residence into a three unit property.

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

Foreclosure sale. This property had gone through online Auction three separate times. I offered the same amount every time and it was accepted on the third one. I liked this property for its potential to be converted into a multi-family property. Zoning allows for 5 units. Large corner lot, MIL already in place.

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

Auction.com
Third times a charm.

How did you finance this deal?

Private Loan. All cash offer. Borrowed an additional $30k to finish renovations.

How did you add value to the deal?

Long hours doing all the work myself. Working through the permitting process to convert a single family residence into a duplex. Finding a way not to have to put in fire sprinklers. Taking advantage of 2020 ADU legislation which allows ADU's to be added to multi-family properties. Re-use and re-purpose as much material as possible.

What was the outcome?

1/1 Renting for $1050
2/1 Renting for $1350
Studio Renting for $750

Garage potential for future 4th unit. Extra electrical meter installed for future development

Lessons learned? Challenges?

For remodels,conversions staying under two units allows you to follow Residential Building Codes (much easier). Going to three units requires you follow regular building code which is more involved including the need for fire sprinklers. For my project it would have been an additional 30-40k to put in sprinklers and not feasible.

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

Do you have an ace rewards card? Wish I had a dollar for every time I heard that.