How I Turned a DUPLEX into 20 Units!

either bigger pockets it's math Faircloth are doing another video blog for you guys because I want to talk to you about this role of apartment buildings that we own for today anyway because we're selling them today today is a day of closing I'm actually leaving this site right now to drive to closing after this but before we left I wanted to tell you a few stories about this deal and some lessons I learned and hope to hopefully I can convey that to you too so here's how this apartment complex came about when my wife girlfriend at the time I and I both lived in Philadelphia we started real estate investing while we were dating we bought a duplex and we bought it put tenants in had made repairs to it and increase the value to the point where it was worth a good bit more than we had bought it for and then we got married and very quickly learned that it kind of stings self-managing a unit that's really far away when we got married we moved to New Jersey about an hour or so away from that duplex so very quickly we learned we got to sell this thing because we just move too far away from it to have to run down there and do showings if any maintenance issues come up or whatever she's too far away for us to self-manage so we sold it and we had a nice spread of value in there so we did a 1031 exchange for those of you they don't know what a 1031 exchanges briefly it's something where you take the proceeds of a sale and instead of having to instead of putting those proceeds in your pocket and having to pay tax on that which can be significant amount of tax you've rolled it into another project there's a lot of rules and regulations around it and there is a ton of stuff on BiggerPockets about 1031 exchanges so look that up if you want to learn more we did a 1031 into these two buildings this is 350 and then 350 to Concord Avenue we bought these two buildings with a 1031 exchange some more of our own equity and obviously a mortgage that went into it as well just these two so this is a four unit and a four unit is what is what these are so for about a year we own these buildings they did well we were happy we got a call from a building owner across the street and 359 Concord and they said hey we see that you bought those buildings would you like to buy ours too and we said absolutely so we bought that one as well structured some things with another investor that came in with us and thing on it and we put that deal together and closed that one the rents were low we increase rents we did what we could to increase the VAT to increase the income on the buildings in that and for a while we owned 12 units on this building now if you notice there are separate tax parcels they're not actually an apartment a 12 unit apartment complex there's separate tax parcels on the same block we treat them as one big building and the tenants do on our books through that way and you know and I'll get to why it's really important down the road here so fast forward to a few years later it was a bankruptcy sale on one of the buildings on the block when the market started to tank and everything like that if I haven't mentioned we've owned these buildings for 10 years we're selling them today and we've owned them for these two anyway for 10 years and the other ones for less than that of course but when the market started tanked one of the buildings on this block went into a bankruptcy it was for sale for less than half when we paid for these of course we jumped on that right pulled in some more investors that came alongside us and we bought the building rehabbed and pretend it's in everybody's happy we make money so now we're up to 16 units again it's four separate tax parcels but it looks like one big building to anyone that's going to look at it because it's all the same all the units are the same everything's the same in the buildings we treated it like a 16 unit people viewed it that way as well then one more building comes up that was a another distressed sale after the shakeout from the downturn in the real estate market so of course what am I gonna do I jump on that when that building we bought for half of we bought for the discounted one so we we bought that one for a little under a quarter what we paid for these two so hey we're doing well they did quite a bit of work you did a full got rehab it was a completely vacant we tore it apart put it back together it's in great condition now but that brings us up to 20 units and for about a year we met these 20 units on the block and it just started to make sense for some goals that my wife and I have for paying down some money that we that we borrowed me first first got started ten years ago we took out some lines of credit and things like that with with people to partner with us and everything and it's just time to make those lines of credit and some of that debt that we have that's just lingering go away made sense to sell these buildings we actually really really like these properties but for our long-term vision it makes sense to sell here's the lesson to you guys if you are looking for multi-family you don't necessarily have to go out and buy a 20 unit apartment building you can go and buy a building that's on a strip a row of apartment buildings if it's a good location and if the buildings are all identical or the same like these are these are all exactly identical you walk through one you've seen them all so find a site like that and own it get to know the neighbors you never know eventually they may look to sound before you know it you could turn a poor unit investment into twenty units even more or less are just way more than the four units that you have that you bought by just slowly assembling properties on the block you already know how to maintain them you already have management in place for the one that you own you already have leasing strategies in place and everything like that you already know with your rent for why not buy more of them so if you seek out deals like that you can slowly over time ten years build up a an investment that's much much more than what you originally started with so we're really excited about this sale and I'm really excited about the story on how we assembled this I hope it was a value to you guys so I if you'd like to get it some banter going some conversations about doing assemblage of small Maltese like this to make a bigger multi 1031 exchanges you know self management anything like that let's get some combo going so leave a comment below love to hear from you guys and I hope you have a great great investing day out there make it a profitable one and I hope to hear from you soon

Channel: DeRosa Group

Views: 263,990

Keywords: derosa group, Real Estate Investing, buying apartments, duplex investing, real estate investing for beginners, real estate for beginners, real estate agent day in the life, real estate investing 101, passive income, real estate, investing in real estate, passive income ideas 2021, buying a duplex, multi family real estate investing, Trenton New Jersey, matt faircloth, passive income online, Real Estate (TV Genre), duplex investment property, multifamily real estate investing

Id: JzhkWhyssaM

Length: 6min 0sec (360 seconds)

Published: Thu Jul 23 2015