Deal Diary

$128k Profit Apartment Flip

$102K Profit Single Family Flip

 

Profile of the Project

We made $128,000 on an apartment building flip in three and a half years.

  • Location: Tampa, Florida
  • Type of Real Estate: Apartment Building
  • Scope of Project: Acquisition and Disposition
  • Length of Project: 2012 to 2015
  • Size of Real Estate: 6 Units
  • Purchase Price: Bought for $265,000
  • Selling Price: Sold for $340,000
  • Investment: $80,000 down
  • Average Rent of Building: From $550 per month to $650 per month.
  • Historic Vacancy Rate: 100 percent occupancy at acquisition and disposition

The Story

This was simply a good buy for us. In three and a half years, we made a 53 percent return on our investment! We placed $80,000 down to buy it and financed about 75 percent of it. Then, we made a total of $48,000 in cash flow during the time we owned it:

  • 1st year cash flow: $12,000
  • 2nd year cash flow: $16,000
  • 3rd year cash flow: $20,000

This was due in part because we increased rent by $100 per month over the course of three years. A rent increase like this for six units adds up quickly! It generated a 15 percent return—not including sale price.

On top of cash flow, we made $75,000 profit at the sale! 

Lessons Learned from the Project

This project taught us how vital it is for an investor to complete a thorough due-diligence before closing. In other words, the money is made when you BUY an asset because the purchase price is the one thing you can control. In most instances, if there’s an issue with the property, it becomes leverage in a negotiation for a price reduction prior to closing.

We reviewed every single lease, inspected inside the structure, outside the structure, utility connections and even saw each unit and met the tenants. Fortunately, there wasn’t anything wrong with the property, so we paid the full asking price. It was just a great deal in a great market.

   
SHARE THIS ARTICLE

Subscribe to 
our Newsletter: