Closing Day
This photo was taken on the day we closed in 2017. The 120-year-old victorian home behind us was converted into a duplex in the 1970's, but had since fallen into disrepair. There were ferrets living in a bedroom and the house smelled like urine. We moved in and started demo the same day.
Over the next few months, we worked full-time jobs while working on the house every night and every weekend. We 'camped' in one of the bedrooms and set up an office and a toaster with paper plates in another. We had access to one old bathroom, which provided the only sink to wash dishes. Everything else was a construction site.
Why ...
Prior to this, we were living in a completely remodeled condo in Hoboken, right across the river from Manhattan. We left our brand new kitchen and bathroom behind because we wanted the experience of doing everything ourselves. It was brutal (we drank massive amounts of IPAs), but it was also one of the best experiences of our lives. Personally, trial by fire is my preferred way to learn.
Now that I've done it, I would never do a live-in renovation again. But somehow we managed to mostly finish this massive renovation in 3.5 months. We had a big Christmas party to celebrate - a tradition we continue today.
We bought this old house for so many reasons - but #1 is we knew it would propel us toward our ultimate goal: own and renovate as many income properties as possible.
How ...
As of this writing, we own 6 rental units and we are aggressively looking to acquire more. Getting to where we're at now would have been harder if we didn't make the sacrifice to move in and renovate this duplex. Today, we live in one unit of a completely renovated home and pay almost nothing for it. This allows us to throw the vast majority of our income into acquiring and renovating new properties.
We found this property through a realtor and made an offer that was over-asking but still below 65% of the projected after-repair-value. At the time, we anticipated that fully fixed, it would appraise at $500,000, and it did.
We paid for almost all of the repairs out-of-pocket. Since we did most of the work ourselves, except for the electrical, roof and exterior painting, we were able to finance all materials on zero-interest credit cards. As you may know, Home Depot and most major home improvement stores offer this.
We also begged & borrowed from family (thanks mom and dad!) to get us through the finish line. We also had some help with labor from family. (Shout out to my sister's boyfriend who is a plumber, my parents who helped us on demo day and who also sent over a couple workers to help us paint some rooms!)
We refinanced the property within a year and paid everyone else and ourselves back for all the construction costs.
This whole thing may sound like a huge risk. What if we ran out of money? What if we simply could not handle the work load?
We did take on a major project with little experience (I had none, Matt had some). We did rack up debt. And we did take few breaks from work for months at a time. It was crazy stressful.
However, the success of this project was not based on luck. It was 100% pre-meditated risk.
Prior to the purchase, I read 41 books on real estate investing. I analyzed and researched properties in our market for one year. We looked at all the comps for this home and we knew it was under-valued. Perhaps most importantly, we knew that absolutely nothing could stand in the way of us completing this house. That's the difference between success and ambition: relentless action.
Questions?
I'd love to answer any questions you may have below. Have you purchased your first investment property? If not, what's stopping you? Are you experiencing any issues with a current renovation project? We now manage construction & design for other investors. So if there is anything we can help you with, lay it out for us below!