Crazy Cat Lady Duplex

[Pete Harper]

Investment Info:

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

Purchase price: $85,000
Cash invested: $60,000

Crazy cat lady duplex.

This is going to be our most ambitious real estate renovation project yet. This is a 1960's all brick single story duplex. It was originally build as a mother in law property with two identical 1200sqrft 2 Bedroom/1 Bath units. It was most recently occupied by the original owner who had cats. The place reeks of cat urine. She has moved to an assisted living facility and we purchased it from the family.

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

Two things attached me to this deal. First I could see a huge value add potential with 1200 sqrft of underutilized space. Second due to the poor condition of the property we were able to negotiate a low price.

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

Found the deal on Zillow. I have searches running in multiple target markets. I received notice the day it was listed. Asking price was $110,000. We went in too aggressively on price initially at $75,000 all cash thinking we were the only bidder. We were wrong and a second higher offer came in behind us. Seller accepted the second offer. During inspections the buyer discovered a gas leak and backed out. We were able to negotiate the a final price of $85,000. Leak fixed for $195.

How did you finance this deal?

All cash offer. The cash for this property comes from a cash-out refinance of a 4-plex we purchased with 1031 exchange funds in September of 2019. The same capital has been cycled through two properties in a single year.

Gotta love the BRRRR Strategy!

How did you add value to the deal?

Our plan is to totally gut the house removing all the dated wood paneling, kitchen cabinets and bathrooms. We will rebuild as a 4 bedroom/ 2Bath with laundry. This will make the property family friendly in keeping with the residential neighborhood. Since this is a bigger project than we have done before we plan on hiring a contractor to do the major work; demo, framing, electrical, plumbing, and sheet rock. My wife and I will do the finish work with new kitchen cabinets, new bath, flooring

What was the outcome?

After reno is complete and we have the property fully rented we plan on doing a cash-out refinance and go find another deal. BRRRR!

Estimated ARV $225,000
Profit $80,000, 55% ROI
Estimated cash-out refi $168,000

Lessons learned? Challenges?

Perseverance. Not giving up after you miss out of the first deal.

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

Angela Kennedy was our agent. This is the 2nd deal we have done through her office..