8% Cap Rate to 23% Cap Rate in 30 Days - Miami, Florida
Just thought I'd share a big win to inspire other investors:
I recently purchased a 3 unit triplex in Hialeah, Florida for $270,000. It was below market value for that area and I bought it under rented at $2,600/mo. The landlord had owned it since the 50s and hadn't raised rents in years, giving me some leverage to negotiate a lower price.
I bought it with a 75% LTV commercial mortgage at 4.6% with a 25 Yr Amortization. Total money down was about $67,500 (closing costs were close to nothing since I have a hookup at a Title Company).
One month after closing, I raised rents on all units. 2 out of the 3 tenants moved out and I had new tenants within 24 hours. When all is said and done, the rents were $3,550/mo.
Here is the breakdown of our return:
Rent: $3,550/mo
Taxes: $458/mo
Insurance: $475/mo
Mortgage Payment: $1,139.98/mo
Monthly Cash Flow is: $1,427.02
Cash On Cash Return = ($1,427.02 * 12) / $67,500 = 25% as opposed to 8% with the previous rents in place
I wish I could find 2 or 3 of these deals per year!