Duplex Full Cycle

[Charlotte Dunford]

Investment Info:

Small multi-family (2-4 units) buy & hold investment.

Purchase price: $117,000
Cash invested: $35,000
Sale price: $175,000

Location: Calhoun, GA
Purchase: Jan, 2019
Sold: May, 2021
Purchase Terms: $117,000, 25% down, 30-year amortization, 5.99% interest rate.
Capital Invested: $35,000
Exit Price: $175,000
Proceeds at closing: $67,736
Net profit at exit = $67,736 proceeds - $35,000 invested = $32,736
Equity multiple at exit $67,736/$35,000 = 1.94x
Return on investment at exit = $32,736 net profit /$35,000 invested = 93.5%

What made you interested in investing in this type of deal?

Major Strategies Implemented:
Real estate acquisitions require the talent to find the diamond in the rough. This property was the diamond in the rough. It was undervalued, and I saw the potential in it. My firm belief in never overpayi and always underpay for an asset helped me in this acquisition. The negotiations with the sellers further decreased the capital needed to close, bringing down the common denominator in the ROI formula. This acquisition was set up to win from the beginning.

How did you find this deal and how did you negotiate it?

MLS

How did you finance this deal?

Bank Financing with Wells Fargo. Purchase Terms: $117,000, 25% down, 30-year amortization, 5.99% interest rate.

How did you add value to the deal?

Increased prices/rents by $475 within 20 months. The biggest winning strategy in real estate is increasing your price as that adds directly to your bottom line without costing a penny.

What was the outcome?

93.5% ROI just at the exit, not including the 6%-8% + average return during the 2-year hold time. Counting the monthly return during the hold time, the total ROI is well over 100% and the equity multiple is well over 2x.

Lessons learned? Challenges?

The appraisal came in at $155k and the buyer’s lender would only finance $155k, I knew the buyer was motivated and they already spent $1k on inspections and $5k of EM to lose if they did not agree to my terms. I was in a great position to negotiate. The buyer agreed to split the difference between the sales price of $195k and the appraised price of $155k, final sales price at $175k. The buyer came out of pocket $20k.