4 Unit Flip + Quad Development (BIG PROFIT)

Added: 2026-05-10

[00:00:00]Welcome back to the channel. My name is CJ Cachimon, real estate developer here in San Diego. We are at this four-unit flip and four-unit development we bought 2 and 1/2 months ago out of a short sale and today I'm just going to walk you through just the deal really, you know, how we found it, you know, our plan to build the four units, our strategy to flip it and kind of what that entire process looked like. How did you guys find this deal? It's going to be interesting. One of our friends bought it out of a short sale and we bought it from him like the day after he closed. What's a short sale again? It's kind of like a It's kind of like a foreclosure. So, he bought it and he kind of wholesaled it to us for 700 grand. And that's essentially a four-unit right now. So, there's an existing triplex. There's a garage that had plans to convert to a junior ADU.

[00:00:47]And then there were plans approved to build four units. So, the day we closed, we really poured the foundation, started going vertical on the development.

[00:00:58]So, this is the front house.

[00:01:00]Each I got some photos before, but like dude, this thing was trashed. There was actually homeless people living in here when we bought it. So, there was everything was boarded up. We took everything down and there was really like a homeless lady full-on bed like straight-up living here. So, we got them out, you know, first thing we did is, you know, demolition.

[00:01:19]Pretty simple and then we went ahead and did all the drywall repair. It's kind of the first thing. Get it painted and then you can go ahead and do all the finished stuff. So, we put these floors in. Uh this is like C-class style tenants. So, I'm going with like a darker floor. It's going to get thrashed. You know, it looks pretty dirty in here, but we were able to keep the bathroom insert, put in a new vanity, simple stuff. For flipping, it's pretty it's pretty straightforward, right? Like first thing is demo, right? You need to get a clean slate. The next thing is typically the roof cuz if you have any leaks in the roof, any work you do inside is going to get ruined. So, you do the roof. So, we resheeted this roof. We didn't to a full new roof. And then next step is all of the drywall repair, get it painted, [music] and then after that you do all the fun finish stuff. So, you you know, put the floors in.

[00:02:05]These are actually from another property we have.

[00:02:07]So, we did a full eight gut remodel on a higher-end property. So, we actually took those appliances, put them in storage, and they're in here. Again, this is C class. So, like we went and got discounted granite. This granite was like 100 bucks a slab. Uh it cost 300 bucks per slab to fabricate.

[00:02:22]So, it's 200 bucks in materials and 600 bucks to install. So, 800 bucks for that. And these cabinets and installation was only like 20 I think it's 2,200. So, really pretty inexpensive.

[00:02:33]It's a two-bedroom, one bath. Yeah, pretty simple stuff, man. Just keep what you can. We put in new baseboards. We put in new fans. 300 bucks per bedroom. Yeah, I mean, I think we spent like 20K. Put a new mini split in. I mean, it's San Diego hot. So, 20 25K unit.

[00:02:50]Some flips are like 50K if they're really bad. This one actually like wasn't too terrible. I started out buying multifamily in the West. I did after like a year or two and was making like no money. And so, I wanted to ask you in San Diego and I couldn't buy multifamily cuz I didn't have the money and I didn't understand to raise money.

[00:03:05]So, I started flipping. I probably flipped like 50 houses or doors in like 2 years. So, I kind of Do you still enjoy the flipping stuff or not really?

[00:03:14]Dude, the only reason we're flipping this is just cuz it had this development piece to it.

[00:03:19]But, I don't I don't do flips anymore if I don't if I don't have to. I don't I don't mind it.

[00:03:26]It's just like sometimes it's a lot of work for not a lot of money. How did you figure out that you could build all of this stuff?

[00:03:32]Well, this project was interesting. So, the original developer had remodeled these units actually and then was getting permits to build this.

[00:03:40]>> [snorts] >> And because he didn't have certificate of occupancy, he never rented out these units. And then he ran out [music] of money. And so, when we bought this, we had to work with the city to renew the permit. So, we you know, paid a few grand, got the permit renewed, and we did all that actually in escrow. So, we were doing all the due diligence on this to make sure we could build it and all that. Yeah, it's pretty easy to renew.

[00:03:59]And so, literally the day we closed, we poured the foundation and 2-ish months in and we got windows framed. We're doing all the roughing work right now.

[00:04:06]So, we're we're hammering. Yeah, so this is It's called R3 Construction. Just duplexes. So, when you when you get more than two two units, you have to do like fire sprinklers and all these expensive things. It's two duplexes, one-bedroom units. They're like 650 square feet each. They're pretty way out there.

[00:04:21]We didn't choose these plans. Like, we didn't get them permitted, but it'll play. How many total units? House in the front, we're building four.

[00:04:27]Duplex in the back. And then another garage in the back we're converting to an ADU. So, eight total units.

[00:04:34]Sorry, brother.

[00:04:36]Yeah, you can go in here if you want.

[00:04:43]We'll call for [snorts] inspection probably in 2 weeks. The plumber The plumbers are coming in here tomorrow. So, we'll call for probably a roughing inspection.

[00:04:50]>> [clears throat] >> Get that done.

[00:04:51]Cookie cutter, man. This is the garage that's getting converted to a unit.

[00:04:56]There's not even Dude, there's not even a foundation in this thing.

[00:05:00]Which is wild. So, um You can see we did some of the You see all the electrical and plumbing we had to redo?

[00:05:07]But, uh we'll come in here and do a little more framing and pour this probably in the next week or two. How did you know it was a good deal?

[00:05:15]Got the first one done. I mean, dude, for 700 grand to get a triplex with a permitted JADU alone, it pre-appraised for 1.2 million as is.

[00:05:25]Wow. Yeah, so like the fact that it had permits approved and ready to build a four-unit made it [snorts] way out of course.

[00:05:32]>> get over-leveraged? Like, how does that happen?

[00:05:35]Yeah, I mean, that's kind of like something with new developers, right?

[00:05:38]Like, things pretty much always cost more and take longer. You know, you buy one deal and you're like, "Oh, I'm going to have a payday." You get really excited. And you buy a few more deals, and all of a sudden, you're over leveraged. And if you, you know, didn't over raise on capital, or if you're doing the deal with your own money, and you don't have, >> [snorts] >> you know, extra funds, I was Yeah, you get foreclosed on and sell.

[00:06:02]That's why you got to be really careful.

[00:06:03]When you're first starting out, was there ever a time that you got over leveraged, or maybe close to it?

[00:06:09]>> Yeah, so when I was flipping, it wasn't that bad cuz I was like pretty good about like not buying more deals until, you know, I had a deal in escrow or I'm selling it.

[00:06:18]When I was in between flipping and starting to develop multi-family, I started doing some conversion deals. So, I would basically buy like a house, convert it into a quad, and then go ahead and sell it. And I had like three projects like that. Uh I had a business partner at the time. It took way, way, way longer to get permits. It was just a dumpster fire. And so, we had these three projects just sitting there, burning cash, burning cash, burning cash. We had to just sell one basically for kind of what we bought it for or went in for, without permits, just so we could kind of keep the others, and we you know, we we got the others through and sold them and made some pretty good money. But, um one was like a duplex we turned into a six unit. Another one was like same thing, a duplex turned into a six unit, and we're getting plans to build 10 more units. Yeah, it's funny like you as a developer often times you're like cash poor, equity rich, and so I think as you start doing deals, just be a little bit less risky and try to take some chips off the table and sleep better at night, you know. And I plan to do this for the next 30 years, so like for me to do one less deal a year, maybe sleep a little bit better, it's Yeah, dude.

[00:07:20]>> Makes sense. It's not worth it. How do you start underwriting the deal and that process? Yeah, I mean, dude, it's like it's pretty simple, right? So, like my buddy sent me the deal, and just off the price, I knew like pretty good deal. I almost immediately knew it was going to pencil.

[00:07:34]But, uh yeah, I just put in the the eight units based on the rents, and then I did a construction take off, so I know exactly what the new stuff takes, cost to build. Like new construction, I know pretty much within 5% what that's going to cost, so I, you know, put in how many square feet it was, beds, baths, all that stuff, build out my new construction cost, which for this, I think this is 2,400 square feet, with permits already paid for and everything.

[00:07:59]Oh, And the footings were already dug, we just had to pour the foundation and build it. It's going to cost us like 220 a foot to get that thing built. That is going to cost us, um, around like, basically like 600k to build that quad. Yeah. And then the rehab, essentially you just come in here with like your checklist, right? So like, like you go through and say, "Hey, what do we need here?" It's like drywall repair, paint, new windows, fans, how big is the kitchen, how many cabinets, how much flooring do we need, just like the general stuff. And so I have a template, right? And I'll I'll share my template, plug in all the macros, and to rehab the three units, I think it's going to cost us like 80k.

[00:08:38]And then to do the JADU conversion, it's going to be like another 80k. Yeah, it cost us about 600k for that. The purchase price was seven, so we're at 1.3, you know, carry costs is going to be about probably 75k, or some points on the loan, so probably all in at like 1.4. So I mean, it pretty appraised, it appraised at 2.3 as a unit.

[00:08:57]So I mean, it should it should do pretty well, and we should be able to keep this thing. I like like I like this kind of workforce housing, like it's it's in high demand. Yeah. Like the tenants around here, they can't really afford housing, and it's pretty heavy Hispanic population base around here.

[00:09:11]Mhm. And historically, they've been like my best tenants. Mhm. Yeah, they really definitely like, They take good care of the place.

[00:09:19]>> [snorts] >> Yeah, they take care of the place.

[00:09:20]They're like, you know, a lot of them family oriented, religious. You know, we have people even walking around asking us if they can rent stuff. Affordable housing, yeah. Mhm. There's a big demand. There's a lot of people doing like high-end A-class stuff, and I like boring stuff. Like you can see, like I I do affordable housing. I have a good idea what it's going to cost, and what it's going to be worth and I know there's going to be, you know, rental demand. I know that, you know, my projects aren't so big that I'm not going to have issues renting them up and so I like the affordability stuff and I I think it's cool to build, you know, affordable housing, too. It's trying to help provide a good place for people to live is cool.

[00:09:58]You're good. You're good.

[00:10:01]Any luck?

[00:10:03]No gas?

[00:10:05]Oh, yeah. I think that line might have got chopped on the way.

[00:10:11]Is there a way to fish it? Like a [clears throat] little Like I disconnected that over there.

[00:10:17]I'm hoping to run into it over here somewhere.

[00:10:20]Hey Art, um I can't get a hold of Mark, but I'm here at 46. There's a gas line running to the front house. There's an issue. There's a crack somewhere in that gas line and that gas line goes under the foundation to the front house and there's all that plumbing, you know, the electrical and all that showing through that walkway.

[00:10:38]So, like fixing fixing the crack in this gas line is going to be almost impossible.

[00:10:43]So, the easiest thing we'd do would just is just to cap it at the back unit cuz we don't need gas to the quad that we're building and we don't need gas to the front unit.

[00:10:52]Easiest thing would be [clears throat] just to cap it, just run gas to the triplex in the back, and then just do the front house electric cuz I have an electric stove. If that's a 220 and there's no 220 there for that stove.

[00:11:05]How long would it be to run 220 to the oven?

[00:11:08]220 to the oven? I can run it from here.

[00:11:11]I mean, Art, it's only It's like like 15 ft, bro. It's only a 15-ft run. There's 220 in the back of the house, so we could we could we could run 220 to it in a few hours, you said.

[00:11:20]>> Oh, yeah. Well, that's much better. Now, where are you saying Is Jose saying there's a crack? Yeah, I'm here with him right now. Yeah, definitely cap that gas off so nobody So, it's not dangerous.

[00:11:33]>> Exactly. And then if if he said you can run a 220, I think that he can get in line. Yeah. That was the stove? All right, we'll do that. You're there now, huh? Yeah, I'm there now.

[00:11:45]So.

[00:11:45]>> Are you going to stay there for a bit?

[00:11:47]Um yeah, you going to come here?

[00:11:49]Well, I'll come there right now. I just finished with the city.

[00:12:01]Yeah, we got those spaces.

[00:12:04]I mean, you're the one that probably put those breakers in.

[00:12:06]>> [laughter] >> Yeah.

[00:12:08]5 years ago.

[00:12:10]And not just that, we Oh, is it did this remodel the from the old the builder?

[00:12:13]Oh, really? Yeah, when Jesse was the owner. Yeah. Isn't that funny?

[00:12:24]>> [laughter] >> I was going to scare you. Uh I saw you [laughter] going on the window.

[00:12:31]You're going to be a sneaky bastard. Um okay.

[00:12:36]This gas line goes attached to this building over here.

[00:12:41]So, it's running through the foundation all the way over, and we can't dig this up cuz he ran Remember he ran all the electrical?

[00:12:50]All the electrical and plumbing he ran through here.

[00:12:52]>> Yeah.

[00:12:53]So, we can't We can't dig that up. We can't. It's He So, he just capped it and we're good.

[00:12:59]So, he just He just cut it off and he's going to He just turned the gas off.

[00:13:03]>> That's the cap. Yeah. It's off. And it's off.

[00:13:07]So. It's off of the meter.

[00:13:09]See there? Why did those guys put it right on top? Put the foundation right on top of that. Yeah, but I think they put the gas line in before they poured this foundation.

[00:13:17]Well, we we bought this thing We bought it with a poured One of the One of the foundations was poured, which is funny.

[00:13:23]That's when they run out of the moolah.

[00:13:26]And uh yeah, they poured a poured the foundation over a gas line to the main house.

[00:13:31]And the gas line cracked.

[00:13:33]He's going to run 220 to the stove, and he's going to put an outlet on one side for the stove, outlet on the other side for washer dryer.

[00:13:39]Okay.

[00:13:40]Done. Perfect. Now it'll take him like 2 hours, that's easy. And he's got two extra breakers.

[00:13:44]He does?

[00:13:46]He's got space. Okay, good.

[00:13:47][clears throat] Yeah.

[00:13:54]>> [music]