Here is where having experience, an open mind, and problem solving drive comes in play when dealing with unknowns of cash purchases. This building had been on the market both privately and publicly through a realtor, who is a friend of mine actually, as part of a larger package for almost 1 year. It sits on my main drive to and from work and centrally located among a bulk of my portfolio. It’s also a predominate building on a prime corner of a main road. I contacted the realtor several times who had posted the package for sale but for whatever reason, he talked me out of the package a few times. Mind you, I have a few dozen successful renovations under my belt and have access to capital, so large projects do not scare me. I was the right buyer for this property. Check out my other blog entry “$2000 four units, gypsies, and pitbulls” if you like juicy stories. Regardless, time came and went and I was busy with other opportunities.
One day, I was on craigslist and noticed that the seller had listed this single property for $39k just a day prior. I inquired and long story short I toured then bought the building for $30k cash, no contingencies. Still dumbfounded why the realtor wasn’t able to put this together… whatever.
July 5th closing
#1 was occupied by a local thug. #2 was empty and gross. #3 was occupied by gypsies. #4 was occupied by a small family. I always wanted to try the local lead based paint program and I thought this was the perfect opportunity to give it a shot. I raised $40k on a 2 year private note and started the process.
#2 was the first to renovate where we tore out the old claw foot tub and renovated the bathroom. Did a lot of patching, new floors throughout, then painted.
#1 Thug never paid rent, eventually was thrown in jail and I took back the unit through a back ally abandonment process.
#3 gypsies are still there and are gross as ever with way too many animals. But they pay.
#4 moved out unexpectedly abt 2 months into the process claiming bed bugs.
End of August; #1 and #2 are now empty so I enrolled them both into the local lead based paint program as planned.
September 2020; Lead based paint program contracts are signed. They’ll cover abt $15k worth of work for $3200 out of pocket. 60-90 days general schedule of completion.
October 2020; work has yet to begin on #1 and #2; 2 units empty.
End of October; #3 moves out unexpectedly… I then enroll that unit into the lead program; 3 units empty
November 2020; Its starting to get cold.. I order National Fuel to turn gas service on in #1 to heat both units #1 and #2. National fuel is unable to light furnace because water is leaking through it and its rusted shot.
December 2020; work has yet to begin on #1 and #2; 3 units empty
December 2020; my HVAC contractor does a site visit and confirms major issues at hand… I send my roofer out to inspect the chimney and he says theres no cap and the bricks are soaken wet inside leading us to believe there is serious condensation and moisture build up occurring. And the flu opening is way too small at approx. 6” by 30”.
January 2021… its really starting to get cold. I talk with my HVAC contractor and we do a site visit and determine that 7 appliances are vented through that single deteriorating chimney; 3 furnaces and 4 hot water tanks. The other furnace is in the attic and vented through the roof. Furnace #3 is also in the attic and newer, vented in the same chimney, but in the attic. We guess that when they vented this, they filled the chimney with bricks and debris, smothering the 6 appliances in the basement.
We need to eliminate the use of that chimney.
I believe the right plan of attack is:
- Convert #1 unit, which is a small 1st floor efficiency, to electric baseboards which will eliminate 1 appliance usage.
- Reroute Furnace #2 through the roof.
- Run a new double walled pipe north abt 20’ to a basement window, then up the ally side of the building; rerouting all 4 hot water tanks and 2 basement furnaces through this new main.
- Negotiate a deal for possibly 4 short hw tanks
January 2021; work has yet to begin on #1 and #2; 3 units empty. Unit 3 entered into program but waiting for funding in order to sign the contract, then 60-90 days general schedule of completion.
January 1/20/2021; The gypsies are my only tenants and they’re getting angsty.
The rest of my portfolio is floating this property.
I’ll continue this as we go but I knew going into it that it would be a project both with the tenant base and the lead based paint remediation projects. I would never have been able to do this if it wasn’t for a strong portfolio to lean on and the ability to see these projects through. By the end of this process, I’m aiming to have a building with an ARV of $70k that I am all in around $45-50k, producing $2400 a month in gross rents, with new hardware to boot. But it could take another 3 months easy.
More to follow…