7 Property Portfolio in Clayton County, GA

[Paul Fortson]

Investment Info:

Large multi-family (5+ units) buy & hold investment in Atlanta.

Purchase price: $380,000
Cash invested: $162,298

Portfolio of 7 Single Family Homes I bought for $380K with a 1 year hard money loan @10%. 2 of the 7 were rented and the other 5 needed minor to major renovations. The renovations cost about ~$90K, took 6 months and the portfolio appraised for ~$570K afterwards. I was able refinance the portfolio for 75% LTV and pull out ~$100K. Not a complete BRRR because my cash outlay was ~$160K, but it still worked out pretty well. Current financing is a 10/1 ARM 30 year amortization through LimaOne Capital at 6.675%

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

As I primarily buy and hold investor I was interested in the cash flow. Average cost after repairs for the portfolio was $67K and the average rent is $875 / month and I should be able to go up to $900 / month.

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

It was an off market deal. I asked my property manager to take a look at a duplex I was interested in buying and renovating and he asked how much I was looking to invest and what return I was looking for and sent me the details of the portfolio. There was very little negotiation because he wanted to close in 3 weeks and priced the portfolio accordingly.

How did you finance this deal?

I got a 1 year hard money loan at 10%. The lender was currently financing the portfolio through 2-3 different loans that I believe had gone past their 1 year term so the owner was paying a penalty interest rate of 14%. It was a pretty good deal for the lender because he was already financing the properties and this deal allowed him to consolidate the loans into one loan and also work with a new owner who had the cash to complete the renovations and pay off the loan for good.

How did you add value to the deal?

5 of the properties needed renovations ranging from $2K to $40K.

What was the outcome?

Portfolio appraised for $100K over purchase price plus renovation cost and I was able to pull that $100K out by refinancing the portfolio at 75% LTV.

Lessons learned? Challenges?

I went 50% over my renovation budget because I didn't closely monitor the work. Some of the overage was additional scope I decided to take care of now instead of later. The renovations also took a lot longer than I expected partly due to the time required to get the right permits from the City of Riverdale.