ANOTHA DEAL SOLD – PERSONAL PORTFOLIO UPDATES

I've been posting some updates lately about my personal portfolio – well I sold a 14 unit that I bought. Let's get into it. 

This was a 14 unit mixed use building. 4

three beds, 4 two beds, 4 one beds, 2 commercial

Purchase Price – $375k (Jan 21)

Renovations/capex – $105k

SALE PRICE – $560k (Feb 24)C


Net profit – $70k

Distributions – $15k


Net gains = $85k


Neighborhood: C-

Very blighted neighborhood, result from steel factory plant closing in late 90's Average income was about $32k/year. Great mix of sec 8 and workforce housing. This meant some evictions + unqualified tenants


Rent roll:

Upon acquisition, it was about $3500/month. 4 units vacant. Upon sale, it was about $5k/month with 6 units vacant. At peak, it was about $9k/month

Commercial tenants: $750 + $500 One commercial tenant didn't renew 1 bed – $600 2 bed – $750 3 bed – $925 (!!!) Even at 57% occupancy, our top line was $5k while cost basis was $480k.

Was cash flowing $1-3k/month depending vacancy + renovation schedule


R&M: 

-Roof was old and spongy, had to patch up a few holes

-New washing machine + dryer

-Some units were full gut jobs (cost $12k for 3 bed turn)


Capital stack:

$200k of equity ($200k down)

$175k hard money

$105k credit card bills

=$480k cost basis


Refi'd $250k out after some value add @ 50% LTV ($500k value)

Used $250k to roll into my 22 unit (HML lender was a GP for 22 unit)


Numbers: 

Numbers: $560k sale price

$480k cost basis

Commission + selling expenses = $10k

Net profit = $70k

Distributions = $15k

Net proceeds = $85k

Equity = $210k

Hold period = ~3 years

IRR: 40.5% over 3 years or 13.5% annually


Hope you guys find some value from posts like these. 

 

Based on the highest ranked content on WSO, sharing personal portfolio updates and the journey of real estate deals can be incredibly valuable for the community. It offers practical insights and real-world outcomes from investment strategies, which can be educational for both new and seasoned investors. Here's a breakdown of the key points from your update:

  1. Property Details and Financials:

    • Type: 14 unit mixed-use building (4 three-bedroom units, 4 two-bedroom units, 4 one-bedroom units, 2 commercial spaces).
    • Purchase Price: $375k in January 2021.
    • Renovations/Capex: $105k.
    • Sale Price: $560k in February 2024.
    • Net Profit: $70k.
    • Distributions: $15k.
    • Net Gains: $85k.
  2. Location and Tenant Mix:

    • Neighborhood Grade: C-.
    • Context: The neighborhood was impacted by a steel factory plant closing in the late '90s, with an average income of about $32k/year. The tenant mix included Section 8 and workforce housing, leading to some evictions and challenges with unqualified tenants.
  3. Performance Metrics:

    • Rent Roll: Increased from $3,500/month at acquisition (with 4 units vacant) to about $5k/month at sale (with 6 units vacant), peaking at $9k/month.
    • Commercial Tenants: Contributed $1,250/month.
    • Occupancy Rate: Even at 57% occupancy, the top line was $5k while the cost basis was $480k.
    • Cash Flow: Varied between $1-3k/month depending on vacancy and renovation schedule.
  4. Repairs and Maintenance (R&M):

    • Included roof repairs, new washing machine and dryer, and full gut jobs for some units (costing $12k for a 3-bedroom turn).
  5. Capital Stack:

    • Equity: $200k down.
    • Hard Money Loan: $175k.
    • Credit Card Bills: $105k.
    • Total Cost Basis: $480k.
    • Refinancing: $250k out after value-add at 50% LTV ($500k value), which was then used to roll into a 22-unit project.
  6. Final Numbers and IRR:

    • Sale Price: $560k.
    • Cost Basis: $480k.
    • Commission + Selling Expenses: $10k.
    • Net Proceeds: $85k.
    • Equity: $210k.
    • Hold Period: ~3 years.
    • IRR: 40.5% over 3 years or 13.5% annually.

Sharing such detailed experiences provides a wealth of knowledge for the WSO community, illustrating the complexities, challenges, and rewards of real estate investing. It's these real-life examples that enrich the learning experience for everyone involved.

Sources: What is the most clever, profitable RE deal you've witnessed?, Q&A: Home Run Deal/Project - ~$3mm Profit, ~6.42x EM, ~18 Month Investment Horizon, HOW DO YOU DETERMINE YOUR UNIT MIX?, Great Deals You've Recently Done, From Real Estate Finance to Founder of Development Company - Q&A

I'm an AI bot trained on the most helpful WSO content across 17+ years.
 

Congrats on the sale! Curious as to what your professional background is. Are you working a full-time job as well and if so how many hours are dedicated to your personal RE investing? How much cash should you have saved to start investing in RE at this scale? Looking to do something similar in the future.

 

My background: Was in CRe brokerage in college + a large vertically integrated company after college doing PM. Started buying 4 years ago and still work full-time in an unrelated industry. 

Time? Really depends week to week. During acquisitions it's quite hefty but once you acquire it and have good PM, then it's very chill. 

Cash – have about $50-100k liquid including down payment + reserves depending on how much you're spending on a property. 

 

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