How We Turned a 28-Unit Townhouse Nightmare into a Grand-Slam Investment
Real estate investing is often painted as a glamorous, easy path to wealth. The truth? It’s anything but. Our recent 28-unit townhouse project was a prime example of what it really takes to succeed in this industry—grit, patience, and a willingness to tackle major challenges head-on.
This project wasn’t for the faint of heart. It required extensive renovations, dealing with poor management practices, and handling problematic inherited tenants. But the payoff? Worth every ounce of effort.
The Numbers: A Deal Worth the Work
Purchase Price: $1,700,000
Renovation Costs: $300,000
Appraised Value After Stabilization: $3,300,000
Time to Complete Stabilization & Refinance: 18 months
We originally aimed for a shorter stabilization period, but a drawn-out refinancing process—partly due to exploring agency loan options—extended the timeline. In the end, however, the financial results made the wait worthwhile.
Investor Returns: The Power of Value Creation
We don’t typically measure our projects by cash-on-cash return or IRR. Instead, our strategy focuses on creating enough value to pull the original investment out, leading to infinite returns and cash flow indefinitely. Here’s what that looked like for this project:
No distributions during stabilization.
Investors received 3X their initial investment after 18 months.
Investors now have no cash in the deal but continue receiving quarterly distributions.
If measured by cash-on-cash return:
150% in Year 1
190% in Year 2
Infinite from Year 3 onward
On top of that, we built in a $200,000 reserve from refinance proceeds and secured $800,000 in equity while increasing rental income from $15,500/month to nearly $35,000/month.
Balancing Profit & Purpose: Affordable Housing with Stability
Unlike some investors who only chase top-dollar rents, we took a different approach:
✅ We kept some units below market rent.
✅ We accepted 1-bedroom vouchers for 2-bedroom units.
✅ We focused on long-term tenant stability to reduce turnover and vacancy costs.
Some might argue that maximizing rent should be the only goal. We believe in the triple bottom line—balancing profit, people, and sustainability. Not only did this approach stabilize the property, but it also ensured steady cash flow while providing much-needed affordable housing.
The Challenges We Overcame (A Reality Check for New Investors)
This was NOT an easy project. We encountered serious obstacles, including:
Inherited squatters – Navigating legal loopholes to remove them.
Problem tenants – Including one who had the police called so often the borough demanded eviction (we resolved it amicably within 2 months).
Severe maintenance issues – Rotting porches, ancient furnaces, collapsed sewer lines, roof leaks, and outdated electrical systems.
A nightmare tenant with an emotional support pitbull – The dog had attacked multiple people, yet eviction was contested.
An extreme hoarder with dozens of cats – This led to constant neighbor complaints and property damage, but after legal action, they surprisingly became a model tenant.
Each challenge required experience, patience, and a firm but fair approach to problem-solving.
Final Thoughts: Was It Worth It?
Absolutely. This was not a get-rich-quick deal. It required a deep understanding of property management, tenant relations, and renovations. However, in the end, it became a massive win for our investors and our business.
Would we do it again? Without hesitation.
The lesson? Real estate investing rewards those who embrace challenges, adapt to setbacks, and stay committed to long-term value creation.
Happy investing!