6th buy & hold - Triplex in Palm Harbor, Florida

[Eric Van Deman]

Investment Info:

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

Purchase price: $265,000
Cash invested: $79,500
Sale price: $375,000

6th buy & hold - Triplex in Palm Harbor, FL.

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

At the time CAP rates had decreased significantly in our home market in Denver. As we planned to use a property manager for our next investment, we broadened our search to Florida. I was intrigued by the Tampa market in that values had recovered slower from the economic downturn in this core market and rent-to-price ratios as well as CAP rates were still providing great returns.

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

We found the property through the property manager we wanted to work with. It was an on-market deal that was a new listing. Our property manager was a big proponent of the area and the potential for appreciation, so we went ahead with the deal after a small amount of back and forth with the seller.

How did you finance this deal?

Conventional investor financing. As we held more than 4 mortgages at the time of the acquisition, we were required to put 30% down as opposed to 25%.

How did you add value to the deal?

Our property manager was able to drive rental increases on turnover/lease renewal through some leasing inefficiencies that we inherited upon purchase. The property itself was in good shape, so we didn't do anything to substantial to get it rent ready.

What was the outcome?

We held the property for approximately 4.5 years and upon exit realized a mid-20% IRR on our initial investment. We are in the process of utilizing the proceeds through a 1031 to purchase a 12-unit property.

Lessons learned? Challenges?

While the great condition of the property made for an easy out of state investment for both us and our property manager, we likely would've been a little better served to look for something with a greater value-add component to drive even higher returns.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Brenda Bianchi and Jon Figueroa with Bianchi Realty & Property Management