First Completed deal from investment to sale. 204% ROI

[Charles Clark]

Investment Info:

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

Purchase price: $199,900
Cash invested: $25,000
Sale price: $288,000

First completed deal from analyzing to purchasing the property to adding value to selling for a profit.
I purchased the property using a FHA, and put less than $6k as a down payment. Rents where $575/ea, mn income = $2300, debt service w/ expenses = roughly $1600. W/in 90 days, increase rents to $625 ($50 increase).

Renovated 3 units to increase rents to $750/unit. Each renovation ran between $4-$6k with a total of $18+k

ROI: ($76,000-$25,000)/$25,000 = 204%

Beleza!!

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

It fit my strategy of using my FHA and knowing there was room to raise rents after renovation of units. The strategy was to buy and hold for the next 10 years. My goal was to refinance in 2022, but the market jumped 44% since I purchased the property.

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

I found the deal on the MLS. The price was right for the amount of rents that were being received and the possible growth of rents in the area.

How did you finance this deal?

FHA loan. I was able to get the loan but did not have the down payment. Received down payment and initial funds from outside investors.

How did you add value to the deal?

Found the deal, manage the property, and used investor funds to improve apartments and building.

What was the outcome?

Original purchase price: $199k

Down payment: $6k
Investment: $19k
Total Investment: $25k

NOI (11/2019 - 09/2021): $9k
Sales Proceeds: $67k
Total NOI: $76k

ROI: ($76,000-$25,000)/$25,000 = 204%

Now, I am using this return to invest in a bigger project. I went from 4 units to 14 units in under 2 years. Pick a strategy, analyze properties, talk to everyone you know about real estate, and pull the trigger when you find something that makes sense to you.

Lessons learned? Challenges?

Lessons learned is that you have to pull the trigger when you find something that meets your standards. And problems are going to happen no matter how much you prepare and you have accept it. It is the person who deals with problems who gets to dictate their income.

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

I was the listing agent on the deal. Carly Stack was the buyer's agent and did an amazing job communicating.