Income streams: Updates on Texas 16-unit apartment building

Note: For the past few years I've kept most of our deals hidden in emails and project management software due to the privacy of investors, lenders, partners, and owners. I've learned from other investors and forums, that it's a good idea to share your projects to build credibility in your space. 

In a focused movement to increase transparency in everything we do, for my first real estate related post, other than my multi-unit calculator tool, here is a current project that is in escrow right now. We are very excited to get this cash flowing monthly.

We buy income properties for what it can do for you in your life. It is an asset that you can pull money out of at any time. 

The one is on the smaller side for our acquisitions group (investors are all about economies of scale, bigger is better), but this deal is in an excellent location, I've had friends in this market find lots of success, and it has great cash flow and equity built into it. 

Our mission is to have this baby cash flowing in 6 months. There is a good amount of equity in this deal for our investment. 

Summary

  • Purchase price: $260,000
  • Estimated Rehab costs: $100,000 (this is very conservative at $6250 per unit)
  • All-in price: $360,000
  • Units: 16
  • Occupancy: previous owner vacated all tenants for rehab
  • Market rental occupancy: Over 90%
  • Average market rent: $1000-1400
  • Top 7 job market in the US
  • Unit Mix: all 1-bd 1-ba

Value

  • Appraised market value: $680,000-900,
  • 000
  • Cash return on sale: $300,000-450,000
  • Cash on cash Returns for ownership: 12-20%+
  • Monthly gross cash flow: $16,000
  • Cash flow after over 40% going to expenses: $9,000

Purchase strategy:

  • Option A: Purchase with cash, refinance, and hold for cash flow. 
  • Option B: Purchase with cash and sell it at market value with an agent. 
  • Costs 50%

 

FAQ

  1. Why is the seller selling?
    Foreclosure. Previous owner stopped making payments. It was foreclosed on an out of state owner. Current ownership wants to liquidate and cash out of their headache. 
  2. What are you going to do with it? 
    Fix and flip for appraised value or hold for cash flow. 
  3. How long will your money be in the deal? 
    6-24 months, depends on how long it will take us to get our refinancing from the bank. The bank we are refinancing with is a small local bank. 
  4. When is your closing date?
    March 14
  5. Why do you like this property?
    It needs work, is undervalued, we are going to add value to it via rehab. 
  6. Why income properties? 
    You work at a job not because you love it, but because what it gives you in your life, vacations, food, shelter, gadgets, etc. Same thing applies to income properties, it's an asset that you can pull income out of at anytime, every month. 
  7. What tips do you have for finding an income property for myself?
    Talk to brokers in a target niche market, tell them your criteria, and follow up every week. The key is following up. Make sure the market has strong population and job growth. We like Texas for this very reason. 
  8. Where did you find this deal?
    From my partner in acquisitions. We share deals that we find from our direct marketing efforts. 

Stay tuned for updates: We will have before and after pictures and videos on this deal. Very excited. 

Cheers, 

Swat

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