Bought from a wholesaler through networking where we live (in Denver, CO) end of December last year. I had never been to Birmingham but the #'s for STR on this property were just too good so decided to jump on it. One side of the duplex had hoarders living in it with about 18 cats, and the other side was burned out and vacant due to a kitchen fire (which then became extra storage for the hoarders next door)

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

STR is our favorite RE model and after our city made it almost impossible to do, we were looking for opportunities elsewhere. This property was interesting because it was commercial-zoned so even if Birmingham starts regulating STR (they are not currently), the property is actually zoned to be a legal b&b.

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

A wholesaler brought it to us

How did you finance this deal?

One of my best friends who is extremely risk-averse but has seen us do some deals and said yes in about 2 seconds! She funded the purchase + 50k of the renovation, we funded the rest ($70k) of the renovation ourselves.

How did you add value to the deal?

We rehabed the property basically from the studs (to the tune of $120k). The burned-out side of the duplex was a 1 BR / 1 Bath and we changed the floorplan to be a 2 BR/1 bath. We did this during COVID, and without knowing the city at all.

What was the outcome?

The outcome? Incredible. The only negative is that we had to leave everything we invested in the deal after we paid the original lender back because a) it's a commercial property thus a commercial loan, and b) banks did not want to work with us since we live out of state. I don't think this would have been the case if it was residential property, but commercial was HARD. The property ended up being appraised for 320k. We were originally planning to STR both sides of this duplex but due to Covid we decided to turn the 2 BR into a long-term rental at $1200/month and STR the other side (3 BR / 2 bath) and see how it went. WELL... we started airbnbing this unit mid August and it has netted $2500/month so far. Our costs are $1900/month including mortgage and all utilities for the STR side. The long-term tenant is great but if things go well with the economy, we will turn that side into a STR when her lease is up next year. We already have the furniture sitting in storage. And even though it was a bummer not being able to pull any cash out, we have a ton of equity in it and our mortgage payments are low. We would love to find another property in this area to buy and do the same thing but they are hard to find at this price point. We got so lucky and are so thankful of our awesome investor community here in Denver!

Lessons learned? Challenges?

OMG so many... how much time do you all have lol? Challenges: getting hoarders out when their lease didn't end until June, working with a contractor who was amazing but could not remember anything about any conversations, trying to figure out what was going on when I couldn't go visit the rehab for 3 months during the early times of COVID, working through structural issues, and I continue to have to work through issues with the neighbor who technically owns the driveway (fun!) Main lessons learned: hold contractors accountable with software like hubstaff, etc. Make sure to communicate with contractors that they need to TELL ME when there needs to be a change order vs. do something on the cheap which then has to be changed later. Most of all, I could have saved a ton of $ if I could have trusted my contractor to follow through but instead I had to go down there 1-2 times a month (and flights to Birmingham are not cheap!) I also learned that Birmingham is an AMAZING city!! The people are amazing and it's a beautiful town. Plus the food is incredible :)

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

Not really. The only person I would refer is the wholesaler who showed me the deal! PM me if you want his name because I don't think he's on BP

Here are the Matterports of both sides of the duplex when done and check out some of the before photos!

2BR / 1 BATH (with backyard) - long term rental

3BR / 2 BATH - STR