SFH home BRRRR to a triplex - Buy and hold

[Cassy T.]

Investment Info:

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

Purchase price: $160,000
Cash invested: $245,000
Sale price: $475,000

Purchased a single family home and converted it into 3 apartments. Purchased for $160,000. Put $85,000 into renovations for $245,000 all cash in. Cash-out refinance appraised at $475,000. A pay-out of $85,000. Currently renting all 3 units I cash flow almost $2000/mo. On to the next BRRRR.

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

I was looking for a hack of some type. In my market there were not small multi-families available. So instead I bought a large split foyer to convert to a duplex and was able to make it a tri-plex.

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

I worked with a real estate agent to find a home in need of TLC. It had just had a deal fall though due to them not being able to obtain financing due to the issues of the home. I offered cash and they took it.

How did you finance this deal?

I paid cash to purchase, cash to renovate and cash-out refinanced on a commerical loan at 70% LTV.

How did you add value to the deal?

I added a bathroom. I put egress windows in the two basement bedrooms and added 2 kitchens, to make a 4 bedroom 3 bath home into a 6 bedroom 4 bathroom home, that was broke up onto 3 apartments.

What was the outcome?

70% LTV paid me $85,000 above my investment and I am cash flowing almost $2000/mo. on rents.

Lessons learned? Challenges?

Screen your contractors better. I had a plumber take me for around $1200. A deck builder build a deck I will have to rebuild soon and a roofer cost me $7000 to rip his new roof off to replace with right away since he installed so badly.

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

I worked with a real estate agent, lender, lawyer and CPA to keep things going in my business.