Magnolia Court - Cash Purchase - Buy and Hold

[Joe Martella]

Investment Info:

Townhouse buy & hold investment in Sicklerville.

Purchase price: $72,500
Cash invested: $72,500

This is a 2/1 townhome purchased for cash.

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

The rent was significantly under market rent with a lovely long term (6 years) tenant. The tenant was paying $850 a month when the market rent was $1,200. At $72,500 with taxes just over $2,000 a year and a HOA of $75.00. I could see the cashflow increasing over time.

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

I found this deal on the MLS. All of my rentals have been found off the MLS. The asking price was $75,000. I had an inspection done and used that to negotiate it down a little. The current and future cashflow made sense either way.

How did you finance this deal?

I purchased this cash with possibly refinancing it later. The closing costs were just too high for me and it didn't make sense at the time.

How did you add value to the deal?

This is not a value add deal - it is more of a cashflow deal with the ability to increase rents. I don't see the value of this property being worth much more/less than the purchase price

What was the outcome?

I closed on July 2, 2021. I gave the tenant a 3 month lease for $850 and told her that the rent will increase it to $900 come October for one 12 month term. I also told her that her rent will increase $25-$50 per month per year until we get up to market rent.

Lessons learned? Challenges?

I rarely get an inspection on my properties since they are vacant when I am looking at them, but because this unit was occupied and I don't like being intrusive, I got an inspection with an awesome company. They caught some things that I wouldn't have since I was shy about going through people's stuff. It covered me as there was a pretty major repair that needed to be done immediately.

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

Mary Helen Ranieri - 609-405-2755 - Keller Williams
DwellSafe Inspections and Engineering - 856-770-4247