Investment Info:
Small multi-family (2-4 units) buy & hold investment in Milwaukee.
Purchase price: $156,500
Cash invested: $39,125
This duplex was a "first" in several ways for myself. It was an off the market deal. Was very outdated and has water issues. I will say an off the market deal has its perks because you have no competition. I will also say there is a reason "why" they are selling this property. As I will say in all my posts and conversations, someone is selling because something is wrong. Its up to you to figure out if you can handle it and correct what's wrong. So this is a duplex and both units needed work. Thankfully the upper just needed the carpet in the bathroom removed. Yes, I did say carpet. I did decide to leave it in the kitchen due to it be commercial grade and surprisingly not as noticeable as you'd think. When the kitchen needs re worked out goes the carpet. I re-used the flooring from a friends house since they were ripping it out for updating their kitchen and hallway. This flooring is interlocking self adhesive 1'x3' sections that look like tiles. I used some gorilla glue adhesive in a tube to make sure the tiles stick. Used a white kitchen and bath caulk in the tube to hide the seams which makes the flooring look new. The walls were freshly painted and there was new carpet throughout. There's a small water stain in one of the bedrooms closets, so I'll need to climb into the attic and see whats going on. My gut is telling me its the chimney given its location on the roof. Now the lower was lived in and neglected. Carpet from 30 years ago, good and bad. Bad because I must not have liked the dust or animals or mold in it because I couldn't stop coughing once we tore it up. And it tore with your hands easier than trying to cut it. The good is the original hardwood floors are in great shape, just needed to be cleaned. Which vinegar and water with a damp cloth 2-3 times does the trick. Also shop vacs are amazing over your normal vacuum for jobs like these. We put 10 gallons of paint onto the living room, 3 bedrooms, kitchen, and bathroom walls and ceilings; as well as the window trim. The white helped make it easier to get painted and feel brighter. Did all the painting before removing the carpet. Make the mess on the nasty old carpet; not on your new exposed hardwood floors. I cleaned, cleaned and cleaned. Took out all window treatments there and kept what was cleaned easily. I bought new ones when needed. I removed the additional clutter out of the garage. Even with a moving/ got junk company hired before closing. There still was stuff left over. I removed everything that's not sturtural off the walls. This way you can easily see leaks or holes. Easy to fix and keeps critters out. I do the same with the basement. I recommend dehumidifiers in your basement. Its worth the cost, helps with moisture, smell and mold. The issues with the property is water. Three walls of the basement needed reinforced. Bonus of being a off the market deal. Since a home inspection was done it was now something that had to be let known to all other potential buyers if the deal fell through.. Always get an inspection (never go without), I negotiated and decided to helped cover $1500 of the $8700 repair. Structurally we are good. Now its time to add gutters to the garage, it currently doesn't have any, walls and floors get wet whenever it rains and smells musky. The basement will get damp as well. The duplex needs downspouts cleaned and an additional one added, plants trimmed away from the house and removed, glass block windows installed in the basement, some tuck pointing, caulking and grading done. Seems like a lot, but keep in mind the building was built in the 1950, its still standing. These issues will get addressed over the next three years, then its done. The upper and lower are rented for 950 with tenants moving in the first of June. I advocate do it yourself. Yes the nights were long after work and I worked weekends as well. But the transformation was worth it. The reaction by the agent who found it for us and the to be new tenants was worth it. I made new friends with the next door neighbors who will be cutting the grass and doing the snow removal for 20 bucks a week. If you have the desire and drive you can do this as well. I have a 9-5 which only got busier with the virus outbreak. On top of it the single family I bought 4 years ago will need to be turned over and issues addressed for new renters by June 1. Also put a lockbox on your property as soon as you can. Great for contractors and for you. You don't have to worry about losing or forgetting keys. Its easy to change the code. This duplex was also a challenge with tenants. It's located in a different area than the other three I own and help manage. So the screening process took longer and I went through more prospective tenants. I did get a little nervous but thankfully I didn't deviate from my screening process and managed to find two quality.
What made you interested in investing in this type of deal?
Haven't done one like this before
How did you find this deal and how did you negotiate it?
Through an agent I've used in past purchases
How did you finance this deal?
Conventional loan through the same bank as the other three properties
How did you add value to the deal?
Renovations of the complete lower unit, structural reinforcement of the basemet and asking for more rent than what original owner got in the past.
What was the outcome?
Fully rented for June 1
Lessons learned? Challenges?
Stick to your tenant screening process and everything will get done it only takes time. So don't get to stressed out or worried about it as long as you keep putting forth the effort.
Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?
Worked with Dawm K my agent. Bert who is a contractor and plumber. He took care of all out of code plumbing in the kitchens and bathrooms. Put in a new hot water heater and new sump pump. KWK electric took care of the electrical not to code in the garage and both bathrooms. West Allis heating and air checked to make sure the furnace and ac unit where in good working order.
