1st Deal with Significant Renovation

[Anthony Marin]

Investment Info:

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

Purchase price: $70,000
Cash invested: $60,000
Sale price: $237,000

This was my first deal with a significant renovation. It was a duplex that was vacant for over 2 years but in pretty good shape under those circumstances. I cash flowed it for almost 4 years making over $1000/Mo. Sold it because it was in a tougher part of town and I used the proceeds to buy properties in better areas.

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

The numbers were great!! In 2014 hard money was super expensive as we paid 14%, 4 points and we had to put 20% down of the purchase price, we got 100% of the renovation funds. We put about $20k down after everything was settled. Cash on Cash return was 60%.

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

I got this deal through a wholesaler and negotiated directly with them.

How did you finance this deal?

I used hard money to acquire the property and get renovation funds. We finished the renovation and refinanced the property about 7 months later. We purchased the property and refinanced it in an LLC.

How did you add value to the deal?

We added a bedroom to the 2nd floor apartment and renovated using nicer finishes usually used in that area.

What was the outcome?

Over $12K a year in cash flow and when it was sold I realized an almost 6 figure profit.

Lessons learned? Challenges?

Always use a good contractor. We did have a good contractor on this renovation and it made all the difference while we owned the property. I also learned to do background checks on Sec 8 tenants while owning this property.