Momentum, Squashed.

One could assume the level of confidence we had moving forward. We just proved to ourselves that we could profit on a house based on what we learned from our appraisal mishap. Our confidence was the downfall in our next story. Though it seems that the harsher the fall, the better the lesson.

A multifamily project was on the market at the time of our profit check getting paid out. We just knew that we had what it took to really gain a lot of equity working on this triplex. We made an offer on this space and just started working on it right away. We used the profit from our 2-year house ‘flip’ for the downpayment as well as the repair costs. We didn’t even bother getting an ‘as complete’ appraisal because we knew how to profit at this point.

The details were: $83k purchase + $45k cash input for repairs + 1 full year of work = $128k in. We were so excited. It was nearly impossible to do what we did to that house for $45k. We bought on Facebook marketplace, eBay, repurposed tons of items, etc and kept it within the cash amounts we had handy. We knew that we had renovated 3 kitchens, 4 bathrooms, and all other large-ticket, appraisal-raising items as well as every interior square foot as well updated the exterior of the building. We were about to be on easy street.

Surely you know what I’m about to tell you. I’m expecting a $250k appraisal due to my prior understanding of appraisals. I remember seeing the email in my inbox and having my heart beat out of my chest. Upon viewing, devastation. $105k.

After another appraisal, we had a $110k valuation. What happened? Multifamily is what happened. Multifamily isn’t appraised in the same way that single family homes are appraised. Unfortunately I didn’t know the formula and my pride was my downfall ultimately. Lesson learned: as complete appraisal prior to starting the project - every single time. (You’re welcome, future investors)

This hurt. Our entire plan, foiled. All profits, eaten up by a frustrating appraisal problem. No equity, where to go from here?

Before I talk about what we did next, I must mention that I was more upset about the bottleneck we have with Mattoon’s multifamily. If there is no way to generate a high enough ARV (after repair value) on a multifamily building then there is no incentive for anyone to fix them up. In other words, if you’re going to be ‘under water’ on the project, why would anyone start?

An even more unfortunate cadence around Mattoon’s smaller multifamily properties is that they are typically the first structures on a city block to go awry. The owners of these properties are generally forced to ‘throw things together’ (because there isn’t enough available value to fix them properly) and this causes potential for accelerated dilapidation. Oftentimes the owners don’t have the ability to put money into the property to fix dilapidation. This usually translates to the property being sold for cheap to slumlords who are willing to rent sub-par quality locations to tenants who don’t care to maintain the space. Unfortunately this extrapolates to a worsening of the block that diminishes property values, leaving opportunity for the slumlords to eventually buy them cheaper and grow the block’s problems.

While this is a definite problem, think of the inverse. What if these multifamily properties could get fixed? Would that start a chain reaction in the improvement of the block?

It was at this moment where we were forced into a tough decision. We now see an issue. Do we shift back to single family home improvement and cash in or do we fix a systemic issue with our town? If we properly fix the multifamily properties against all odds (& fiscal sense), hold them long term, and ensure they don’t become a problem for the block, will other homeowners on the block start to improve their locations? Will they be happy or thankful (at least?)

As of 2025, we’re 5 more years into the mission of fixing these multifamilies. We’ve seen a lot of improvement in morale, tangential repairs/updating that’s been done to other houses on these blocks, as well as generally happy and thankful neighbors. (Some people….well…you know how people are…)

More than anything, the greatest benefit thus far is that we’ve been able to provide dignified places to stay for our working class of citizens.

So much more ‘good’ has happened in these last 5 years. More blog posts to come!