Amazing Pocket Listing that turned into a 50% Return

[David Klefeker]

Investment Info:

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

Purchase price: $254,700
Cash invested: $80,000
Sale price: $525,000

Contributors:
Rodrick Frazer

This was a pocket deal from a local broker.
4 plex that was poorly managed but in the path of a major development boom in the downtown area.
We were able to force appreciation through strategic renovations, increase rents by $300 per unit per month and put in place a higher tenant profile. This was originally a BRRRR essentially but in year 2 we got an offer from a developer that we couldn't refuse. So we sold it for over 50% return and rolled into a beautiful property in Hawaii on Oahu.

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

Massive potential of forced appreciation through renovations and raising rents.
It was poorly managed which gave us an opportunity to get a great deal.

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

Pocket listing through a local Broker

How did you finance this deal?

All cash through private equity with a plan to refi in year 2

How did you add value to the deal?

Raised rents by cleaning up the property
Putting in higher quality tenants
Renovating the interiors with new LVP flooring, installing washer/dryers in every unit, dishwashers, nicer fixtures

What was the outcome?

Over 50% Return

Lessons learned? Challenges?

Relationships with brokers is key