Investment Info: 2 family Condo conversion deal in Dorchester, MA
Purchase price: $480,000
Rehab price: $275,0000
Cash invested: $46,000 currently
What made you interested in investing in this type of deal? The Boston market shows us that there is great opportunity to convert old two and three families into condos. We ran the comps with nearby condos and this one pencils out.
My business partner and I have been looking for a deal like this for a while. This particular deal finally made financial sense to buy. Ideally, we want to invest in Buy and Holds, but this flip will help generate a down payment for a buy and hold.
How did you find this deal and how did you negotiate it? A friend brought us this deal and we bought it wholesale.
How did you finance this deal? We used hard money to close fast and finance 100% of the construction. We also raised some private money from investors for the down payment, fees, insurance, and to get us to the first draw.
How did you add value to the deal? This is a fire damaged house. Most of the demo had been done. The house also already had new windows and a new roof. We are able to keep most of the existing lay out and convert the property to two condos. We are making a few minor changes, but for the most part it is staying the same. Both units are going to have a massive kitchen/living area. All bedrooms will also be big for Boston standards.
What was the outcome? We are two weeks in. We currently have demo done, most framing done, and most HVAC done. We plan to finish rough electrical and plumbing and have walls up in 3 weeks. We are looking to move on this as quick as possible. We have a realistic timeline of 6 months to market, but we are doing all we can do crush that and hit the market quicker.
Lessons learned? Challenges? The first lesson learned was that the wholesale fee can make it tough to make a good deal great. We need to start marketing and networking more to find our own deals. However, in Boston there is a lot of competition and people paying stupid prices for homes.
We also learned that an investors money is not good until it is in your bank account. We had 3 different investors back out less then a week from closing. We really had to hustle and network to make this deal work. We were able to lock down our last bit of financing on the way to closing (yes, literally on the drive to closing). On our next deal, we will be sure to have our investors lined up and back up investors. We hope to leverage this deal to build a network of investors, sub-contractors, etc.
I also learned that it is crucial to always be networking. Build a strong network and deals will be easier to find and finance. Do not just network when you need something.
Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?
Yes, our hard money lender, Hussien Skaiky.
My partner and GC on the project, Thaddeus Lenoch of Tackle LLC, is absolutely crushing the rehab. I highly recommend him for any home improvement project.
