Gary’s first investment property was a four unit apartment building. The building needed constant upkeep and it took a lot of creativity to collect rents from tenants. After capital improvement back into the building, there had been no cash flow. He was looking for a property that generates cash flow and is somewhat handsfree.
I presented this opportunity to Gary in July 2012. A family moving from Michigan wanted to write a two year lease to this 4 Bed/2.5 Bath/2 Car Garage house in Powell. The husband’s employer pays them housing allowance equal to the rent they are willing to pay. According to the 10 year financial forecast I created, the CAP Rate (NOI) is 8%, cash flow $6,000-7,000 and the payoff comes in the 3rd year. It is in Dublin school district and Chapman Elementary School is within walking distance!
Gary made an offer to the property on July 6, 2012. After 6 days and 6 counter offers, he went into a contract for the price that satisfied him and the return numbers. However, toughest part of negotiation was still awaiting him. The tenant asked him to raise the rent by $50 to include mowing : )
After an inspection, remedy request, negotiation, all the things Gary requested are repaired by the Seller. The tenants moved in happily.
【4 Bed/2.5 Bath/2 Car Garage Single Family Home in Powell】
10 year forecast of the investment
net operating income around $16,500/year
cap rate/year (NOI) 8%
pay off comes in the 3rd year