Purchase, Hold, and Sale of 4-Plex in Columbus, Ohio

[Ryan Haley]

Investment Info:

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

Purchase price: $125,000
Cash invested: $125,000
Sale price: $175,000

All-cash, out-of-state purchase of 4-unit multifamily, intending to hold indefinitely, using a local Realtor and associated Property Management company. Rent-stabilized and improved tenant quality, with top-line revenue of $2700/month. Moderate CapEx and property improvements. Strong market conditions led to sale after 28 months of ownership, with the below returns:

-Total Return over 2.5 Years (Net): 43%
-IRR: 18%
-NPV: $54,000
-Cumulative Cap Rate: 11%

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

I wanted a high-cashflow rental property for passive income, in a strong market, and at a price point I could afford on an all-cash basis.

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

A mentor/consultant guided me through the process, after he had built a team and purchased many properties in that area.

How did you finance this deal?

I paid all-cash with a combination of savings, non-retirement investments, and cash value from a life insurance policy.

How did you add value to the deal?

Rent-stabilized the property, increased tenant quality, and made some moderate repairs and CapEx

What was the outcome?

A phenomenal net return over less than two and a half years .

Lessons learned? Challenges?

Cash is king, cashflow is queen, tenant quality is key, and a conservative margin of safety is the ace up your sleeve!