Dilapidated Slumlord Duplex

[James Montague]

Investment Info:

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

Purchase price: $85,000

Purchased a 2-unit duplex from an out of state slumlord right after Covid hit. They were getting $600/month in rent and one unit had been sitting empty for a year, and the other had a tenant not paying rent.

I put $25,000 in sweat equity improvements into the property (financed on 0% 24 month credit card)

I had the first unit flipped and rented in 55 days (before the first mortgage payment), and the second unit was flipped and rented in 85 days.

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

Property was severely dilapidated and the outside was also overgrown.

This was an out of state investor who used the cheapest bidder, and a terrible property manager.

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

MLS. I made an offer 2 hours after it was listed at 15k under asking price as-is.

My offer was accepted, and I later learned they received 10+ better offers after accepting mine, but I beat others to the table.

How did you finance this deal?

I took 24k of equity out of another property to cover the 25% down on the property

I put the 25k in remodel costs on a 24 month 0% credit card.

How did you add value to the deal?

New floors throughout, brand new kitchen, brand new appliances, brand new bathrooms, moved walls to add 25 sq ft to the kitchens.

Added HVAC to both units

What was the outcome?

Rented before my first mortgage payment was made.

Lessons learned? Challenges?

As always, add 25% to your budget and 50% to your timelines.