West Main St, Norton - Duplex, Long Term Hold
Acquisition Photos
This property was purchased as a large single family home. Once part of a grand estate, the heirs decided to parcel off the lots and the house. This home had more than 4,000 square feet of usable area. In order to take the best advantage, town approvals to change use from a single to a multi were necessary. A previously covered "pool house" was converted to a large, second dwelling unit.
Post Rehab - Unit B
Unit B, which is the front-side, main-house, is a 4 bed, 2 bath cape-style home. This home boasts large bedrooms and 2 full bathrooms. The basement has over 1,000' of additional heated space. We performed a cosmetic rehab, updated the kitchen and baths, and updated the utilities. The home is now rented on a long-term lease.
Post Rehab - Unit A
Originally an outdoor pool in the 1970s, and then covered in the 1980s with a well-built free-spanning structure. In the 2000s the previous owners illegally converted the structure into 2 apartments. To best capitalize, we received town zoning and planning approvals to convert the structure into a 4 bed, 2 bath apartment. This change of use also triggered stretch code. This portion of the project was the bulk of the heavy lifting, but completion added $275,000 to the property value and $60,000 in gross rental revenues.
Project KPIs
Acquisition and Project Basics
Project Type: BRRR
Property Characteristics: As Complete - 8 bed, 4 bath
Location: Norton, MA
Acquisition Source: Wholesaler
Construction/Improvement Timeline: 4 months
Total Timeline: 8 months with approvals
High Level Financials
Acquisition Price: $535,000
Rehab & Carrying Costs: $300,000
As-Complete Value: $940,000
Value Created: $100k in free equity
Investment Metrics
Purchase Debt: Private investor, 75% of purchase price, another $100k drawn at unit A permits
Investor Returns: $42,000 in interest payments, prior to payback
Annualized Rate of Return to Investor: 12%
Refinance: Bank Financing, cash-out refinance, 70% LTV
Cash Out and Cash Remaining: $150k cashed out at refi, $170k left in the project
Gross Rents: $9,500 monthly combined
Operating Expense: 21% of gross
Returns: 22% COC returns, all cash left in the deal will be paid back in 5 years
Value Add Summary
High Level Scope of Work:
- Unit B - Kitchen and bath updating, paint throughout, and cosmetics to restore the "90s" look to modern, durable finishes
- Unit A - Full stretch code rehab. We essentially built a new 2,000' home inside an existing shell.
- Unit A required all framing, layout, windows, doors, insulation, plumbing, electric/service, and finishes.
Value Add Highlights:
- This home had massive potential and is ideally located for a rental with access to public transport, schools, shopping, and highways
- The 5 year plan is to sell these as condos, all work was done to easily split these parcel into 2 large condos.