3 Unit Project - 15% Cash on Cash Flip or 5.5% Cap Rate Hold

[Eric G.]

This 3 unit project is comprised of:

3bed/2bath 1383 sqft (market rent: $2200)
3bed/2bath 1345 sqft (market rent: $2200)
4bed/2bath 1577+ sqft (market rent: $2350)

Units are side by side in a townhome fashion, so nobody on top of each other.
All three units have a 2 car attached garage, laundry hookups, and private back patios.
Located in the highly desirable Sunny Hills school district of Fullerton

This 3 unit building is being sold as one project. Each unit is classified as an individual condo in tax records, and each has it's own APN number.
They are part of a complex with 18 units. However, the HOA that was created decades ago is no longer active.
You have to purchase all 3 units as one project. In order to sell them as separate condos, you will need to create a new HOA. I have an old letter from attorney explaining process.
That cost is included in the calculations below.
Otherwise the condos are in fine condition, and will only need carpet/paint once tenants move out (currently mo-to-mo).

Solid comps in the same school district range from $433k-$450k (with smaller square footage). so if you sell each condo at $450k, total sales price is $1,350,000.

Could also be a great buy and hold. Market rent for all three units is about $2200-$2350 ($6750/month total).
All utilities are billed separately and are tenant responsibility. Very low overhead.
Cap rate of about 5.5%.


Purchase price: $1,080,000 (All cash only, 30 day close)
Closing costs: $0 (2% seller credit included in price)
Paint/Carpet/HOA Formation Costs: $45,000

Total Cash Invested: $1,125,000

Sales price: $1,350,000 ($450,000 avg of each condo)
Closing costs: $47,250 1.5% closing fees, 2% buyer's agent=3.5% (assuming you are a broker)
Net Sales Price: $1,302,750

NET PROFIT: $177,750
CASH ON CASH: 15.8%