First major renovation (buy & hold)

[Doug Hickey]

Investment Info:

Townhouse buy & hold investment.

Purchase price: $59,000
Cash invested: $75,000
Sale price: $194,500

Needed a complete renovation after uncovering safety and structural issues during demo. Upgraded electric, added forced air a/c and ductwork, and new plumbing. Added master bath and laundry on 2nd floor and a half bath on first floor. Using this property as a rental and a cornerstone for my business as leverage and investment. Developed a partnership with a local organization http://www.chepinc.org/ and their mission of providing transitional housing through veteran-only programs.

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

Great location and the property needed major upgrades to compete with the upcoming area

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

Foreclosure alert and drive-by. Worked with an agent familiar with foreclosures and Fanny Mae

How did you finance this deal?

Cash from the sale of a previous flip.

How did you add value to the deal?

Built in 1920, this was a complete gut. Upgraded electric and HVAC to code. Added master bath on 2nd floor, enclosed rear porch and added a half bath on 1st floor. Used old flooring for an accent wall and refinished 100 year old floors on 2nd floor.

What was the outcome?

Appraised for $194k and could have sold for more than I anticipated in this market but decided to work with a veteran transitional housing program to house veterans in need. Win-Win situation.

Lessons learned? Challenges?

Start the refinance process to convert to a conventional rental loan sooner to pay off renovation loan.

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

Local contact and friend was the agent and networked with mechanical contractors. Started a conversation with a framer at the Home Depot for labor if I purchased materials.