We were at 12 units between single family homes, a duplex and 4-plex which were almost all gut job rehabs. We sent out another direct mail campaign and several months later received a call from a Mom & Pop-type owner of a 10-unit building with 8 of 10 units rented. 2 units were offline needing complete rehab. It was dated, but otherwise well cared for inside. Rents hadn't been raised in years and were over $300 under market as-is and even more once rehabbed. There was value-add at every corner.
I negotiated back and forth and ended up getting it under contract for $260k with 15% seller finance on top! However, after inspection we realized that the large back porch which was the primary access for several units was in need of immediate repair. Renegotiated to $250k. 3 weeks before closing the seller said he no longer wanted to do seller financing because his son thought it was a scam. He refused to close or have any further discussion about it. We presented the deal to 2 of my colleagues at the time to partner with us, but they weren't interested. We did not want to lose this awesome deal, so scrambled to come up with the rest to close ourselves. 3 weeks later we had the property closed and the work started.
With raising rents to market value, half the tenants left. Cash flow went down as the other units were offline getting rehabbed. Michael renovated these units himself which are all now fully rented again and cash flowing well! Pics below of some of the BEFORE and AFTER pics of the rehabbed units.
Tomorrow I'll discuss the gut job renovation of the last 2 units as well as our current refinance of this building!
“When 1 door closes, buy another one and open it yourself.”