Secondary Market Duplex - Henderson NC

[Daniel Sellers]

Investment Info:

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

Purchase price: $75,000
Cash invested: $15,000

Up-Down brick duplex. Previous owner filled with tenants before handing it over. Units are 2/1 and Rents are $625 at time of purchase. The cash on cash rate will be double digits as long as repair cost are as we expected. There is an unfinished basement currently being used as two storage rooms. Long term, these could be converted into a 700 sqft 1/1 to add additional cashflow.

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

Cash Flow. The prices in Raleigh NC have gotten too extreme to get good cashflow, so landlords are moving out to secondary markets, Rocky Mount, Henderson, Clayton, to name a few.

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

MLS.
It was listed for 80,000 and after going under contract for full listing price we were able to negotiate down the purchase to $75,000 because of some foundation issues. We have fully budgeted those repairs, but we are waiting to see if they progress or have settled before spending the money.

How did you finance this deal?

Community Bank loan.
This deal was done into an LLC, so financing was only a 20 year, 5 year period, at 4.25%. The bank was cooperative and gave us a loan of $64,000.

How did you add value to the deal?

No Value added yet.
Long tern the unfinished basement has potential to be a third unit.

What was the outcome?

So-far-so-Good
We inherited tenants but got them on new leases. But we would like to screen and fill it with our own eventually.

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

It's actually the agent's fault for calling me and asking if I wanted to see anything that weekend. I had just run the numbers on the duplex and it looked good. So we jumped at it.