A walkthrough of a multifamily acquisition in Centerville, Ohio: why they bought it, the $1.3M investor funding, and a $470,000 tax benefit from cost segregation. They're hiring a dedicated property manager and raising rents on existing tenants.
$2.88 million ($60,500 per door).
$2,650,000.
May 16, 2022.
$925,000.
Four investors; approximately $1.3 million raised.
Okay. We wanted to do another case study for you, and this one is actually one that we're doing right now. We're still in the middle of this one.
We're really excited about this deal because it's right here in our backyard here in Centerville, Ohio. We have our 15,000 square foot office, over 50 team members, and we're vertically integrated so that we can do everything. And we already have a 56 unit that we've talked about before. Right. And so the benefit of having a footprint and then adding another property to your portfolio is we made one big shift and it's why we made the decision to buy this property. And I'm going to talk about the numbers in just a second. It's because we were going to be able to hire one person to handle both properties and they would be an employee in the buildings paid for that employee. It has saved us so much money and allowed our numbers to increase and do better for investors because we were able to make that move. You can typically make that move at 80 doors or more. So that's one of the reasons we bought this property. It was asking price originally was $2.88 million, or $60,500 per door. We negotiated the price down and we were able to buy it for $2,650,000. We closed on May 16, 2022. So this is a deal that we're working on right now. We had a renovation budget of $925,000. The rental rates for the current tenants in the property was $200 below market. So we knew we increase the rental rate and get the renovations done. Now because of our 56 unit, we knew we could do a blitz in one year of renovating everything. Unfortunately, this was a property where we could actually do the business plan we intended on the other one of taking tenants from their existing units and moving them into a renovated unit and just increasing their rent. Well, just recently we transitioned. We hired this full time property management person for our multifamily portfolio and they did an analysis of all the rents of our properties and they were actually able to bump up the rents higher than we underwrote. Then our renovation company says, hey, I know you wanted this done. In a year, we're going to be done sooner. We've got a last building that we're working on after the plumbing got fixed and we're going to be finished and you'll be fully occupied. And so the exciting part for us is not just that we improve the numbers for us and we were able to hire somebody full time. But there was four investors on this. We had to raise around $1.3 million. And in our network, four investors raised their hand and said, hey, we can cover the entire thing. And so they're a part of this deal with us. And the cost segregation study is a tax benefit to our investors. We have $470,000 in tax write offs for this one property. It is insane. And we put in a utility package for the residents and that has increased our profit. I mean, this property is just. We're killing it. And we're super excited because it is our backyard and we want to specialize and just be amazing in this area where our footprint is and we can control all the variables. So if you want to learn more about this property and where we're at, we'll continue to provide updates to you. And if you'd like to be a part of one of our next investment opportunities, then click the link in our bio and join the investor club.
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