I Bought A 26 Unit Apartment Complex For $520,000

My 26 unit apartment complex.

Let’s dive into the numbers

Accepted offer price: $520,000

Initial offer was based on the tax assessed price which is public information. As a pro tip, usually the tax assessed price is under market value so you buying with instant equity.

Loan terms: 25% down payment (130k) , 4.2% interest fixed 10 years, 30 year AM

Negotiated $60,000 in seller repair credit which cut my down payment in half!

Appraised at $750,000 (230k instant equity day 1 ; this is the power of getting off market deals using direct mail)

Renovation budget: $300,000

• 30k new roof

• 15k repair and paint exterior

• Average renovation per unit is 10k

I was very hands off during renovations and let my property manager decide what was the most cost effective and tenant proof.

After renovations, was able to raise the rents from $350 > $700-$750. If you are able to double the rents, you double the net operating income, meaning you double the value of the apartment complex.

Let me show you the numbers.

• $700 rent x 26 units = $18,200/monthly gross income

• Expense ratio: 55%

• Monthly NOI = $8,190

• Annual NOI = $8,190 × 12 = $98,280

• Assuming 6% CAP rate for C-class apartment

• Value = $98,280/ 0.06 = $1,638,000

What if I want to do a cash out refinance?

• Assuming 75% loan to value for cash out refinance

• New loan = 1,638,000 × 0.75 = $1,228,500

• Existing loan = $390,000

• Total TAX FREE cash pulled out = $1,228,500-$390,000 = $838,500

• Total profit excluding down payment and renovation budget = $838,500 - $300,000 - $70,000 = $468,500

• I get ALL my down payment back, ALL my renovation budget back, PLUS an addition 470k tax free

This is the power of 1 multifamily deal. Just 1 multifamily BRRRR can start the snowball. Imagine doing a cash out refinance every 3 years. This is how you can scale and own a multifamily empire.

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