Over/under "duplex" in Pocatello Idaho

[Bonnie Low]

Investment Info:

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

Purchase price: $110,000
Cash invested: $15,000
Sale price: $125,000

Over/under duplex in Pocatello, ID

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

We liked the Pocatello market for buy-and-hold investing. Our intent was to BRRRR this property.

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

We bought this property from our Realtor at the time. We had another property under contract that fell through at the 11th hour due to a previously undisclosed lien. We needed to make a purchase in the calendar year for tax purposes so we we had to get another property bought. Our Realtor had just renovated the upstairs of this house and wanted to sell. We did a facetime "walkthrough" with her and accepted her recommendation that the bottom unit could be renovated for $10,000.

How did you finance this deal?

Conventional loan for "second home" with 10% down payment. Cash for down payment and slight repairs. We used DL Evans bank, a local bank.

How did you add value to the deal?

Appreciation. We had intended to remodel the bottom unit to increase cash flow, but our Realtor's estimate of repair costs to get it livable were WILDLY inaccurate. After getting several contractors and tradespeople to the site, we estimated $25-$30,000 would be required to finish the basement unit. The single unit upstairs cashflowed just under $100/month.

What was the outcome?

We sold the property a little over a year later for a small profit due to market appreciation. We did not convert the bottom unit into habitable space because the numbers just did not make sense. We would have had to put too much into it and wouldn't be able to get our $ back out using the BRRR method because the ARV just did not support it.

Lessons learned? Challenges?

We had visited Pocatello several times and had even drive by this property on a prior trip so we knew the neighborhood and knew it was a solid brick building. However, we hadn't been inside and that was a mistake. Accepting our Realtor's recommendation about potential repair costs was also a mistake. We trusted her because she'd done remodels before. We're still not sure why her estimate was so far off base. I don't believe she deliberately misled us. I think she and her partner just cut corners

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

While our Realtor didn't work out, our Property Management company has been excellent: talk to Garret Durant at Real Property Management in Pocatello.