First Deal of 2021 in the Books!

[J. Mitchell Bernier]

Property Information:

Two Single Family homes in Albany, GA. Both currently rented and across the street from one another.

Purchase Price: $60,000

Appraised Value: $78,000, $40,000 on one and $38,000 on the other

What made you interested in this deal?

Pure Cash Flow. The properties were rented for $550 and $500 currently and we knew that with a little work the rents could increase to $650 and $600.

How did you find this deal? How did you negotiate?

These two properties had been listed on the MLS for quite some time and were marketed for sale separately, but buried in the listing it said "willing to sell as a package". Once we found out the other property was just across the street we were all in. He was originally asking $45,000 for one and $38,000 for the other and they had been listed for quite some time. We made an offer of $60,000 for both, with $1,000 in EM, and a short due diligence period. Seller never countered and accepted our offer.

How did you Finance the deal?

10yr Balloon with a 20yr amortization period at 5% rate with a local bank we use through our LLC. This rate may seem high with current market, but the bank only charged us $600 bucks for the loan fee and only wanted 10% down.

Outcome?

We finally received the settlement statement today and our closing on Monday. Property manager has already met with tenants and got new leases signed over and will start cash flowing day 1. We plan to fix up one property at the time have the rents raised to market by year end. Also with the purchase being way under the value, we are expecting to pull al our cash back out or set up a line of credit for small repairs within 3 months after purchase. 

Estimated Cash on Cash Return: 51.41%

1-2% Rule: 1.75% at current rents once raised 2.08%

Monthly Free Cash Flow: $290 a month or $145 a door

Challenges?

COVID Delays!! We were originally supposed to close this in Middle of January, but appraisal came late due to COVID, attorney’s office was shut down due to COVID which pushed it back two more weeks, and then getting a quote for repairs took longer as well. Side note, everyone is fined who was effected by Covid. But finally got the all clear and will get these in the Portfolio on Monday!