Crazy Cat Lady Duplex

[Pete Harper]

Investment Info:

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

Purchase price: $85,000
Cash invested: $60,000

Crazy cat lady duplex. This is going to be our most ambitious real estate project yet. This is a 1960's all brick duplex. It was originally build as a mother in law property with two identical 1200sqrft 2 Bedroom/1 Bath units. It was most recently occupied by the original owner who had cats. The place reeks of cat urine. She has moved to an assisted living facility and we purchased it from the family.

All-in cost $145,000
ARV estimate $225,000
Rents $2200

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

I have a zillow search running with my buying criterial. This property was listed and we viewed it the next day. The duplex was in bad shape but had potential. We saw a way to convert it to from 2BR/1BA per side to 4BR/2BA. Huge upside potential.

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

Found the deal on MLS. We didn't win the initial offer. The first buyer's deal fell through and our agent alerted us. We were able to close the deal with a slightly higher offer.

How did you finance this deal?

All Cash

How did you add value to the deal?

With 1200sqrft to work with there is more potential in the property than just a 2BR/1BA. It has a half-assed carport conversion adding an unofficial 3rd bedroom. Since this is a bigger project than we have done before we plan on hiring a contractor to do the major work; demo, framing, electrical, plumbing, and sheet rock. My wife and I will do the finish work with new kitchen cabinets, new bath, flooring and paint. We have budgeted $60,000 and 6 months for the project.

What was the outcome?

After reno is complete and we have the property fully rented we plan on doing a cash-out refinance and go find another deal. BTW the cash for this property comes from a cash-out refinance of a 4-plex we purchased with 1031 exchange funds in September of 2019. The same capital has been cycled through two properties in a year. Gota love the BRRRR Strategy!

Lessons learned? Challenges?

The original contractor was a complete train wreck. We are headed to court. LL Never give a contractor too much money up front.