This was a Value-Add investment opportunity. It was purchase in 2014 as a short sale (it took us 6 months to get bank approval). It was an old 1940s structure that had been remodeled in the 1960's and all the finishes were pretty much frozen in time. We remodeled the units one at a time over about a year period (as a unit would go empty we would remodel). It was all sweat equity at the time or the rehab likely would have been much more. $60k remodel. Cash flowed $1000/mo after expenses.

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

This was a classic case of stumbling into real estate investing. My wife and I were young without kids and wanted to plant our savings into a home but instead found a 4-plex fixer.

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

It was on the MLS. It took us 6 months to get bank approval to purchase this as a short sale.

How did you finance this deal?

30yr conventional. 20% down. Had to borrow 10k from parents to make it happen.

How did you add value to the deal?

We remodeled each unit as they became vacant then raised the rents once fixed. (paint, floors, countertops)

What was the outcome?

Higher rents. Better tenants after we stabilized the building (it took at least a year to get a good tenant base)

Lessons learned? Challenges?

Old buildings can be challenging. It made it hard to buy, hard to remodel and even harder to exit. There is always something for an inspector to find on an old building. This made a lot of buyers walk and we lost momentum after listing the property. (We actually dropped out of escrow 4 times). Lots learned on the exit.

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

Chris Headrich in Redding, CA is excellent.

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Norcal 4-Plex Buy and Hold (Just Exited)

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