Apartment Acquisition

@flipped_out

Equity 141·Posted 2w ago

Just closed on a 12-unit multifamily property in South Florida. Paid $1.2M, which translates to a 7.5% cap rate based on in-place rents. Current rents are below market, with an average rent per unit of $1,100. Pro-forma rents show potential for $1,400 per unit, a 27% increase. Value-add plan includes renovating unit interiors, upgrading common areas, and implementing more efficient property management. Renovation costs are estimated at $150,000. Projected increased revenue and reduced expenses should boost the cap rate to 9%. With a projected resale value of $1.8M after renovatiosn, this property has the potential to yield a significant profit. The plan is to hold for 3-5 years, allowing time for the renovations to take effect and the market to appreciate.

1 comment

@txrei_pro·2w ago

I'd like to dig deeper into the pro-forma rents, a 27% increase seems aggressive. What's the basis for the $1,400 per unit target, and have you factored in poteential rent concessions or vacancy rates during the renovation phase? Additionally, how did you arrive at the estimated renovation costs of $150,000, and what's the projected expense ratio post-renovation? The loan amount and terms would also be helpful to understand how it's sized to the 7.5% cap rate, and if there's any debt service that could impact cash flow.

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