Traded scope walkthroughs for first call, which turned into a 4 unit

Framing background, so what I have to offer an agent isn't capital, it's the ability to stand in a basement and tell her within ten percent what the repairs cost. Started doing that free for one agent last spring. She'd text a listing address, I'd meet her there Saturday morning, walk it for 45 minutes, and send her a one page repair estimate she could give her buyer. Did nine of those over about seven months. Zero dollars.

In November she called about a 4 unit an estate was selling. Two heirs, out of state, wanted it gone before spring and did not want showings. Never listed.

Numbers. $340k purchase. Four units, all one bed, in place rents $975 and had been there since 2021. Market for a renovated one bed in that pocket is $1,150 to $1,200. Two units were vacant at closing which is why the heirs were tired. Put $58k into it, most of that two full unit turns, a shared boiler that was original, and exterior. Took eight months to get all four at $1,150. Refinanced at a $455k appraisal.

What nearly killed it. The appraisal on the refinance came back at $412k first pass and I had to bring the comp set and the executed leases to the appraiser through my lender before it moved. Took three weeks and I was carrying bridge money at the time. Also one of the heirs went silent for 19 days during the estate paperwork and I had zero ability to push, because there was no listing agreement and no pressure on anyone. The agent kept calling the attorney's office until it moved.

What I'd keep. The free walkthroughs, exactly as they were. Nine Saturdays bought me a phone call I could not have bought with money. She earned a full commission on this one paid by me since there was no seller side offering, and I paid it without a conversation about it.

Answer

0hannah_west29 Get yours

Run the version where the appraisal holds at $412k. What does your refinance leave in the deal at that number, and does the whole thing still work or does it just become a slower deal? I ask because the three week fight is the part that sounds easy in the retelling and it's the part that decides whether you can do this again in twelve months instead of thirty.

Also, all four units at $1,150 against in place $975 is a 18% lift and you got it in eight months with two turns. What happened with the two occupied tenants when their renewals came up? That's the number I'd want, because market rent on a renovated unit and what you can actually move a sitting tenant to are different figures and the gap is where a lot of pro formas fall apart.

2 replies

3carlos_nunezActive

Nine Saturdays is maybe 40 hours of your time plus fuel. Against a deal that appraised $115k above purchase before you count the $58k in. That's a good trade and I'd have made it.

The part I'd push on is what happens now. You've established that you work free. Does she still call you for walkthroughs, and are you still doing them at zero, or did the arrangement change after the closing? I've watched these relationships get awkward at exactly that point, where one side thinks the debt was settled by the deal and the other thinks the Saturdays continue. Worth saying out loud to her before the next estate call comes in.