We converted a junky 2 bed/1 bath to a gorgeous 3 bed/3 bath!

[Quillan Houser]

Investment Info:

Single-family residence buy & hold investment in Topeka.

Purchase price: $21,904
Cash invested: $95,861

Contributors:
Manny Herron

After water damage had destroyed most of the interior, we took it down to the studs and I designed a new layout. A poorly designed section of the kitchen was converted to a full bathroom for one of the main floor bedrooms. We added a stair case to the second floor (attic) in the over sized dining room. We converted the space into a master suite with a full bathroom and 100 sq. ft. walk-in closet. New roof, gutters, high eff HVAC, and more. 2 bed/1 bath 1121 sq. ft. converted to 3/3 1471 sq. ft.

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

Our main focus has always been to BRRRR properties and when I can find a house that has been completely neglected like this one was, I get excited to turn it into something amazing.

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

We have purchased most of our properties from our wholesaler, Manny Herron. He contacted me about this property and I originally dismissed it but after walking through I knew we needed to have it. It was a good price so we quickly signed a contract.

How did you finance this deal?

My partner and I split the purchase and rehab costs with cash. I personally used money provided by a family member to cover my half of the purchase price.

How did you add value to the deal?

I ran all of the numbers such as repair costs and ARV to determine our purchase price and if the deal would work. After we closed on the purchase, I managed the project nearly every day and did a lot of the work with the contractor. I designed the layout for all of the changes we were making to the kitchen, bedrooms, bathrooms, and laundry room. I selected all of the fixtures, cabinets, and appliances.

What was the outcome?

We refinanced the property and the appraisal came back much higher than what we originally thought. I am conservative with the ARV so this will typically be the outcome. We now own a nearly all new house and have no money stuck in the deal.

Lessons learned? Challenges?

This was the first project where we collected the contractor's insurance declaration pages and their licenses prior to allowing them to work on the property. It was perfect timing because the original roofer we had did a very poor job and after a heavy rain, all of the lath and plaster inside the home was destroyed. We filed an insurance claim and their agent said the contractor had tried to cancel the policy that morning. They still paid up!

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

I'm a Realtor so I have access to the MLS to run comps on properties. Our lender we use for our portfolio is Kaw Valley Bank and our loan officer is Jay Tunnell. We have been able to refinance our properties very quickly. I typically start the refi process during the tail end of the rehab since appraisers are about three weeks out here. By the time they come in, we are just finished and the loan can close the next week.