This duplex was not in great cosmetic shape when we purchased and was rented out far below market value. After we purchased it, we renovated the upstairs unit and we were able to get some great tenants in. Then, we rehabbed the bottom unit (which had been occupied by a tenant with multiple cats and dogs for over 20 years). Needless to say, it was a complete overhaul. We completed the rehab and now have both units filled at market rate with reliable tenants.

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

I liked the fact that it was a duplex, as this seemed to provide the ability to keep it partially rented while we fixed up the other side. Additionally, it is this same flexibility that made this investment in a duplex feel more comfortable for me as a first deal.

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

I found this deal on the MLS and was able to negotiate with the seller, who was in the middle of some financial struggles. Taking this property off of their hands was actually helpful to them because they could no longer afford to maintain it.

How did you finance this deal?

Conventional mortgage. Rehab was financed with a partner in the deal and then we were able to re-finance and take most of our cash back out.

How did you add value to the deal?

I was able to add value to the deal by completing complete rehabs to both units. Afterwards, we increased rent significantly, as the downstairs unit was still paying less then $500, where market rents in the area were closer to $750-$800.

What was the outcome?

This duplex has been completely rehabbed and is now fully rented. It cashflows between $400-500 a month after all expenses (including maintenance, vacancy, and capital expenses)

Lessons learned? Challenges?

From here on out, I do not want to do as much of the rehab work as I did on this property. Although I enjoy doing the work with my hands, I am not as skilled in some aspects of the rehab as I'd like to be. Additionally, I think my time would be better utilized elsewhere.

We did hit a few snags when rehabbing the lower unit, including major electrical issues that forced us to replace the breaker box and a completely rotted main line below the foundation of the house.