All Forum Posts by: Joe DeFarias

@Stephen Brown Thanks Stephen for the heads up! 

If I forget to measure the final locations of the recessed lights before the sheet rock goes up, I usually refer back to the dimensions on reflected floor plans I gave to my electrician. You are absolutely correct about taking pictures along the way. They can be a great reference source.

More updates coming soon!

@Steve Vasconcelos Great to see you on Bigger Pockets Steve! It's been awhile. I hope all is well and I didn't realize you were a town over!  Let's grab some coffee during a weekend that works for the both of us.

@Charlie MacPherson Thank you Charlie!  Good luck on the rehab. Let me know if you need any pointers! I'm always happy to help.

It’s been a couple of weeks, but I’m back with more updates!

Time to start rebuilding now that the demo is about 90% completed for Phase 1.

The bathroom was the first to tackle. I roughed framed the new tub location and installed a rough opening for a new built-in style medicine cabinet along with additional blocking for towel bars and future accessories. 

For the trained eye, you’ll notice I removed the existing window and plan on replacing it with a smaller awning window that will be at a higher elevation to minimize future water damage. For the second floor bathroom, the plan is to remove the window in its entirety.

The image below was taken in the front hallway facing the living room (to the left) and the dining room (to the right). When we removed the old wall paneling, we discovered there was actually a door that the previous owner paneled over. My wife and I were delighted with this discovery. This new opening created a better open plan design for both living spaces. It also allowed more day light into the hallway, which was dark during the day. I removed the actual door, which was still in place, and  will just be a framed opening similar to the entrance into the dining room. 

I had supplied my electrician some reflected floor plans a drafted up to make sure all of the ceiling mount electrical boxes we centered in the rooms and followed the lighting layout in the bathroom.

And below is the bathroom design

Now for the big decision! Both heating units were ancient; in fact, the first floor unit was being heated by the original boiler, which belonged in a museum. My wife and I decided to remove all the radiators and convert to forced hot air furnaces with central air. Our two family qualified for a 0% energy loan that the state of Massachusetts supplies for older home like this one ( MassSave). It's a great program and I advise all Mass. residence to take advantage of this great program. The numbers worked, so instead of only replacing both boilers, we replaced the entire heating systems for both units. This was a decision based on holding this property for a very long time because of the location. Later on down the road, I don't want to worry about 100+ year old radiators leaking and failing. We also used the MassSave program to replace all of the exterior windows of the home.

Now for the fun stuff! (Insert sarcasm)

Since we will be living below our future tenants, I wanted to make sure to mitigate as much sound transfer as possible. If you missed my introduction, I work for an architectural firm that specializes in hotel design so I’m fairly up to date on dampening sounds transfer between ceilings and demising walls.

This ceiling system consists of two layers of Roxul Safe n’ Sound Insulation in between every ceiling joist. This material is great for muffling air borne sounds like conversations, TV and radio noise.

The second layer of sound protection are the resilient channels installed to the ceiling joist. Instead of using typical wood strapping as nailers, resilient channels are design to dampen impact noises like walking, stomping, and even the bass from a radio.

The third layer of protection will be 2 layers of 5/8”, fire rated, sheet rock. It’s proven that the more mass within your wall or ceiling assembly, the better chance you have to dissipate sound transfer.

I took a close up of a small piece for those of you who have never seen this product before.

One of the last items to covert this old New England home into the 21st century is installing cable and internet connections in many of the rooms. I ended up installing cat-6 in all the rooms to give us and future tenants the freedom to install them modem in any room. 

Rough plumbing - Complete!

HVAC Duct installation - Complete!

Rough Electrical - Complete!

I've scheduled the rough inspection with the city and once we pass, we're ready for sheet rock!!

My @Steve Bracero@Ricky Beliveau@Corey Melkonian@Nan Xu@Lior Rozhansky@Fred Sams didn't work. I think these will work now.

@Steve Bracero

Thanks! Come along for the ride! The goal is to post at least one or two posts of progress a week.

@Ricky Beliveau

Thank you Ricky. Since this will be my primary residence (house hacking) for a little while, I will not be posting publicly the exact location. If you are very interested, shoot me a private message and I can share. I noticed you are doing some condo conversions in the Boston area! I’d love to buy you a coffee and pick your brain on some of your strategies and stories of some of your projects.

@Dave Visaya

Thanks Dave! I’ll keep you updated on the progress!

@Corey Melkonian

Thank you for the kind words and advice. This will be a fun and profitable little project.

@Nan Xu

Thanks Nan. I actually found this short sale on the MLS. Because of the location, there was a good amount of offers on the property, 39 to be exact. It is all about the terms and patience. Many investors do not want to wait and go through the short sale process. Because of my knowledge in construction, we waived many of the contingencies. I found some old knob and tube wiring in the basement; saw a good amount of asbestos insulation around pipes and some lead paint in the basement. I knew the sellers did not want a buyer tire kicking the property and bringing in a home inspector to go through the place. By finding these items, I also knew that this would eliminate many buyers using FHA loans.

@Lior Rozhansky

Thanks Lior! Again, since this will be my primary residence for a little while, I will not be posting publicly the exact location. If you are very interested, shoot me a private message and I can share.

@Fred Sams

Thanks Fred! I look forward to keeping up with the updates and progress!

OK, the fun is over! Let's get back to work!

Here is the plan…

Phase #1

Is to demo and renovate the front hallway, living room, dining room, bedroom and bathroom so my wife and I can move into the first floor. We will keep the kitchen and office (second bedroom) as-is for now. This decision was made so we could move into the new home as fast as possible in order to rent out the last unit in our 3-family that my wife and I have been living in the past 3.5 years.

Phase #2

Once we have moved into the first floor and settled in, the next phase will be to tackle the second floor unit. Phase 2 ( in green ) will include completely renovating the full bathroom and kitchen, and add another ½ bathroom and another bedroom to the second floor. In total, this will make this unit a 4 bedroom, 1-1/2 bathroom which would be catering to the young professional market here in the greater Boston area.

Phase #3

When Phase 2 is completed and the second floor is rented, phase 3 (in red) will be to finish our unit (main priority is to get this house hack cash flowing). Last phase includes demoing the existing kitchen and renovating the second bedroom.

Enough Planing! It’s Demolition day!

Here are some photos of demo day! Yes, my wife and I are crazy and did this in a weekend. 

Here is what's left of the 1st floor bathroom.  It was in rough shape and we just took everything down to the studs. One nice surprise (insert sarcasm) was that the previous owner had only replaced the bathroom waste stack in the basement. During the open house, I was excited to see a PVC waste line in the basement. Once we removed the walls in the bathroom, we noticed that they had only replaced the basement section of the waste line (you can see this in the bottom right hand corner of the bathroom photo). So the original cast iron waste line was resting its weight on the replaced PVC section, which is a big NO NO.  This turned into replacing all of the plumbing. I didn't mind this because I was contemplating on moving the toilet location near the shower anyway ( which is ideal ) Landlords out there! If you have the chance, relocate the sink vanity away from the shower. The vanity base will riot away from the shower head over spray. 

Living room ceiling demo! We discovered there were three ceilings in this room. There was an ugly drop ceiling, which was hiding a sheet-rocked ceiling. Once we removed the sheet-rocked ceiling, we found the original horse-hair plaster and wood lath ceiling. We took them all down!

Dining room. This room only had two ceilings to tear down. :) That was the good news. The bad news was there was more knob and tube wiring within the ceiling that needed to be replaced. The majority of the wiring was updated, but I guess the previous owner failed to replace all the wiring in the ceilings. Surprise number 2!

Now since we were replacing all the plumbing in the bathroom... we replaced the kitchen waste and supply lines as well. The original kitchen vent, waste and supply lines were installed within the exterior walls. This is not the ideal location for running water since in New England it gets pretty damn cold during the winters! To eliminate any chance of pipes bursting during the winters, we relocated the kitchen plumbing within the interior walls. See below

Bedroom progress picture below. Now your probably wondering... Joe! Why the hell are you removing all the ceilings? Are you mad?

Simple answer... maybe.  Since my wife and I will be living below our tenants, I'm creating a sound resistant ceiling assembly which I will show everyone in great detail in a later post. I design hotels in the Boston area as my full time job, so i'm very up-to date on wall and ceiling assemblies that mitigates sound transfer. We decided to live on the first floor because the second floor will bring in more rent due to the 2 additional bedrooms.

Front Hallway. This photo is facing the front entry. 

Fun fact!  That pipe within the ceiling is actually an old intercom system. It's a hallow aluminum pipe which runs up to the second floor. This house was built in 1912, before electric intercom systems. There was a mouth piece located above the second floor door bell which one could talk into. The sound would transmit through the hollow pipe to another mouth piece on the second floor. You could hear people clear as day through the system... it was pretty neat!  Another fun fact for the people who have never lived in old homes, the original gas lines were still connected to the old ceiling lamps within the ceilings. Yes, there was a time when homes did not run on electricity! There was a time when lamps were fed by gas.

This is the second bedroom. This room will be completed in Phase 3 once we wrap up the second floor. Until then, I'm using this room as a small work shop.  Don't you just love the 60's dark walnut wood paneling! We removed most of it on the first floor... I'm still having nightmares of this paneling.

Quick photo of the second dumper of the weekend! There will be plenty more! Steve, the driver who dropped this can off, was a surgeon with the dumpster. I don't know how he did it, but he fit the 20 yard dumpster in-between my garage and the neighbor's garage. I just shook his hand and asked for his autograph. 

The messy part is almost over!  Stay tuned!

First off, my name is Joe DeFarias and I am pleased to meet all of you savvy real estate investors. From the many emails sent from Brandon Turner, I've finally started my first discussion on BiggerPockets and I am thrilled to start an investor deal diary with my second multi-family unit. This project took almost a year to find because it needed to meet three conditions. 

1. The project needed to be a value-add investment where I could secretly prove to myself that I could project manage an entire gut renovation for future flipping endeavors ( What better project to practice on then your own home ). This project would create a great opportunity to build a team of subcontractors that can help me out for future projects.

2. The home needed to pay for itself while my wife and I lived in one of the units (The numbers had to work, which can be tricky in the Boston area) The house also needed a garage which can be very rare near the city. Four years ago, my wife and I purchased a 3 family without a garage and it was slowly eating away from me. For most of you who do not know me, I love woodworking and working on anything mechanical, especially cars. The garage would essentially become a workshop.

3. Location, Location, Location! This multi-family not only needed to meet the first two conditions, it need to be located within a one-half mile radius distance from a subway station (for people outside of the New England area, we call it the ‘T’.) This would help rent out the second floor unit quicker and at a premium price!

Before we get our hands dirty on the renovation, a little history of myself…

I am very fortunate to have a dad that was able to teach me a lot about carpentry and general contracting. My father is a GC and I spent many summers working with him on multiple projects when I was younger. The many hours working in construction rooted a great interest in design, ended up going to college, graduated with a master ’s degree in Architecture in 2009, and have been working for a Boston architectural firm since then.

I first witness the power of real estate through my father. My dad had invested in a couple of multifamily properties in the southeastern part of Massachusetts and was cash flowing pretty well, but between balancing a real estate portfolio and running his own construction business, most of his time was dedicated to his construction business. Not only did I learn about construction from him, but my father was also very kind enough to teach me how to manage properties. Granted, I think I have learned more efficient ways on Bigger Pockets, but at least he formed a foundation of knowledge to begin my real estate investment journey.

Project #2

The Two Family, Full Gut Renovation, Owner occupied, Investment property

Now for the pictures! Here are the before pictures on the house when my wife and I purchased the property. We were having a very difficult time finding a 2 – 3 family home in the particular area we were searching in because we were bidding against many contractors and developers that were purchasing multi-families in all cash to perform condo conversions which is something I would like to do in the near future after this project. After about a year of searching, pure determination and 14 offers getting shot down because of higher bids, we resorted to short sales. Short sales are a great strategy because it deters many developers because it takes sooooooo long to close. We were able to purchase this gem due to a short sale.

This is the back of the house with the garage.

Front Entrance to each unit

Unit #1 ( First Floor which will be our unit )

Living Room

Dinning Room

Kitchen

Bathroom

Bedroom #1

Bedroom #2

Here are the pictures of the second unit the day we purchased it.

Unit #2 Entry ( The rental )

Living Room

Dinning Room

Kitchen

Bedroom #1

Bedroom #3

Both units have the same footprint, except the second floor has on more bedroom above the main entry of the home.

I also incorporated plans I personally drafted up so readers can gain a sense of all of the rooms and our design intentions. The plan for the second unit is to convert the living room into another bedroom and change the current dinning room into the new living room. We will be removing the existing pantry and converting it into a half bathroom and we also plan to increase the size of bedroom #1 on the second floor and combine the enclosed front porch by removing the exterior bearing wall and replacing it with an LVL beam. These plans will make this rental unit a very profitable four bedroom apartment. 

Stay tuned for demolition and more in depth plans for the project!

Fausto,

You may be better off comparing CCR (Cash on Cash Return ) numbers instead of cap numbers. For me anyway, CCR is a much better number to follow than cap numbers. I'm interested to hear other people's opinion.

Malden also has high property taxes for investor properties. The city gives a tax credit for owner occupied investors. 

Craig,

What website / source are you using to get these leads? Your cities seem to be spread around, what made you target these four cities?

Everett has worked well for me, I have a three family on the Everett / Malden line.

John,

I too am getting frustrated as well. After my first purchase in Everett, I've saved for three years for another MF. In those three years, property value has almost doubled and the competition is crazy. The last showing I was at, there were agents face-timing clients from China showing them the rooms in the house so they can see the condition. 

Boston investors. What areas are you investing in now? Many properties on the market don't even come close to cash flowing anymore. What is the solution? Salem? Worcester? Brockton?

Wow!! I cannot believe I found a fellow Fall River investor on BP. I just recently joined and searched a couple of keywords... Fall River was one of them. I currently live and work in the Boston Area, but grew up in the Highlands (02720) in Fall River for the first 20 years of my life. I have been considering investing down there since my father owns a couple of investment properties in the city and I know where the "good areas" are. Boston real estate, I believe, is way over priced, and currently looking for other alternative areas to invest in.

I understand this is a fairly old post and I'm wondering if you are still investing in the area and have you been successful?

Thanks,

Joe