All Forum Posts by: Eric Sullivan

Investment Info:

Small multi-family (2-4 units) fix & flip investment.

Purchase price: $985,000
Cash invested: $1,638,784
Sale price: $3,305,000

Purchased a 2 family and re-developed it into 2 luxury condos. Each around 3k sqft with 5 bedrooms & 4.5 Bathrooms. ROI ended up at 25.96%.

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

Potential returns when underwriting the project.

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

Off market.

How did you finance this deal?

Bank debt from a local bank.

How did you add value to the deal?

Constructed two new luxury condos.

What was the outcome?

Both units sold above our proforma numbers.

Lessons learned? Challenges?

Market appreciated which raised the sale prices of each unit. But with Covid that also drove up some of the costs. Mainly lumber which jumped up quite a bit while we were framing.

 As someone who owns and operates both airbnb's and boutique hotels. I would argue that they are different to really maximize any hotel style asset it is quite different. I have seen a lot of people who have jumped into smaller boutique style business and they aren't performing well along with guest reviews and experiences are not good. Just keep the mindset of thoughtfulness around the guest experience as well look at all aspects of operations. 

For clarity I am referencing hotel assets in the 10-40 room range.

 Hey Brett,

Happy to have a discussion. Please send me a message.

 Happy to connect Justin. Shoot me a message and we can setup a time.

Investment Info:

Small multi-family (2-4 units) fix & flip investment in Salem.

Purchase price: $510,000
Cash invested: $330,000
Sale price: $1,350,000

The first floor will be a 3 bedroom 2 full bathroom layout with an open kitchen and living. The second floor will be a townhouse style unit consisting of 5 bedrooms and 3 full bathrooms. This was a full gut + 1000 sqft addition. For the sale we ended up with a single buyer purchasing both units for 1.35m which 200k over our target number in underwriting.

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

The opportunity we saw by converting the building to condos.

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

This was actually on MLS. We weren't the highest offer but no inspection or mortgage contingency won us the deal.

How did you finance this deal?

Commercial loan 75% LTV

How did you add value to the deal?

Complete gut renovation + addition. We also jacked up the house about 2.5" to level off the floors. The property is next to the water so you had a lot of settling over the years we had to correct.

What was the outcome?

Both units were purchased by one buyer which I believe the rent out the 1st floor and live on the second. The units sold for 200k over what we underwrote off market. Essentially this property never hit the market for re-sale.

Lessons learned? Challenges?

We didn't plan on ripping off a third of the house and doing an addition, but as we all know you can't always see what is behind the walls. The stack going out the back of the house was never flashed properly for for 30+ years water had come in an rotted the structure.

Investment Info:

Small multi-family (2-4 units) fix & flip investment in Salem.

Purchase price: $510,000
Cash invested: $330,000
Sale price: $1,350,000

This 2 unit property is located in one of the most desirable neighborhoods in Salem. Located across from the school, 3 houses down from the water, and a couple of minutes walk to the train. The property is perfectly situated for city buyers who can commute quickly to Boston. Our plan is to turn this into 2 luxury condos with off-street parking. The first floor will be a 3 bedroom 2 full bathroom layout with an open kitchen and living. The second floor will be a townhouse style unit consisting of 5 bedrooms and 3 full bathrooms. We ended up ripping off the back 1/3 of the house as it had rotted which we didn't know until we gutted the building. We ended up pouring a foundation and doing an addition to add about 1000 sqft and a roof deck. For the sale we ended up with a single buyer purchasing both units for 1.35m which 200k over our target number in underwriting.

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

The opportunity we saw by converting the building to condos.

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

This was actually on MLS. We weren't the highest offer but no inspection or mortgage contingency won us the deal.

How did you finance this deal?

Commercial loan 75% LTV

How did you add value to the deal?

Complete gut renovation + addition. We also jacked up the house about 2.5" to level off the floors. The property is next to the water so you had a lot of settling over the years we had to correct.

What was the outcome?

Both units were purchased by one buyer which I believe the rent out the 1st floor and live on the second. The units sold for 200k over what we underwrote off market. Essentially this property never hit the market for re-sale.

Lessons learned? Challenges?

We didn't plan on ripping off a third of the house and doing an addition, but as we all know you can't always see what is behind the walls. The stack going out the back of the house was never flashed properly for for 30+ years water had come in an rotted the structure.

Investment Info:

Large multi-family (5+ units) fix & flip investment in Salem.

Purchase price: $950,000
Cash invested: $285,000
Sale price: $2,000,000

Purchased as an 8 unit apartment building and converted all units into condos with a full renovation. Each unit was around 350-400 sqft with 2 rooms + bathroom. Think studios with an actual bedroom wall. The property included parking in the rear for each unit, individual storage units in the basement, as well as individual laundry.

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

The potential returns on a condo sale. The bones of the building were in good shape since all of the plumbing and electrical was up to date. We really just needed to invest in cosmetics of the building both inside and out.

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

Off market from an agent we work with in the area.

How did you finance this deal?

Commercial bank loan 75% LTV.

How did you add value to the deal?

Cosmetic renovations.

What was the outcome?

The property was setup to be sold individually as condos but an investor gave us full ask as if we were selling it as condos so we sold all 8 units to one individual.

Investment Info:

Condo commercial investment investment.

Purchase price: $950,000
Cash invested: $1,100,000
Sale price: $2,950,000

Previously a 3 family from the 1700's. We tore the building down and built 5 new construction townhouse condos (each unit is 2 floors). We dug out the basement about 2' to get proper head height. Per historic we had to retain the chimney so that acted as a feature component throughout most of the units. The property also has 5 off street parking spots. We installed a 20' steel beam to open the back section with two 18' wide garage doors on either side.

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

Condo development opportunity in the heart of downtown.

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

It was brought to us off market by one of the agents we work with in the area.

How did you finance this deal?

Commercial loan from a local bank. 75% LTV, bank covered all hard construction costs. We brought acquisition funds, soft costs, and interest carry to the table.

How did you add value to the deal?

Turned 3 units into 5 units.

What was the outcome?

We sold each condo individually to end users.

Lessons learned? Challenges?

The challenges that come with dealing with historic properties and the towns they are located in. The property was to the lot line with easements on both sides so attention to detail is critical always.

It was an existing 2 family so no permitting required. Salem is about the same as other towns depending on what you are trying to do.

If you are purchasing the property as an investment, I am not sure how you would get better than 80% LTV. At least not that I am aware of. Assuming your plan is to continue to rent this out as a hold as long as the numbers check out I would think you would not have an issue getting approved. If you were trying to take on a condo conversion or new construction project that would present some issues. Mostly they care about debt service coverage ratio on the property and your personal ability to carry the property if it came down to it. If I were in your position I would try to speak with local banks as they are typically more flexible for lending.