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 project yet. This is a 1960's all brick 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?

With 1200sqrft to work with there is more potential in the property than just a 2BR/1BA. It has a half-assed carport conversion adding an unofficial 3rd bedroom. 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.

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

Found on Zillow search. Due to the poor condition of the property it would not qualify for bank financing. We thought we would be to only cash bidder so we came in super aggressive on price. We lost out on the deal initially. During inspection period the other buyer discovered a gas leak and backed out. We came back with a slightly hire price and got it under contract. Seller fixed the gas leak for $195.

How did you finance this deal?

All cash from cask-out refi on another property.

How did you add value to the deal?

We plan on doing a total gut of the interior converting the carport into another bedroom, bath/laundry and living room. The old living room becomes a 4th bedroom.

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 and paint. We have budgeted $60,000 and 6 months for the project.

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. BTW 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 year. Gota love the BRRRR Strategy!

All-in cost $145,000
ARV estimate $225,000
Rents $2200-2400

Lessons learned? Challenges?

Perseverance. Even if you don't get the deal on the first round of negotiations don't give up.

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 second property we've purchased with her help.