How I increased the value of my rental by $255k in 6 months
Hi fellow members,
I closed on a 4-plex six months ago, with three units occupied and one unit vacant. Rented out the vacant unit at market price ($2700) on the weekend after closing. I also submitted application for rent increases on all three occupied units to the maximum rent schedules, which gave me a total increase of $865/month. Upgrades to property: new windows, exterior paint, new laundry room, hot water boilers, landscaping, total cost: $50k. Offered cash to all three existing tenants to move out, and one of them accepted and moved out on the 4th month. I spent one month and another $50k fixing up the apartment, and increased the rent from $1743 to $2800. Total rent increase since purchase: $4622/month. Immediately after I made my 6th mortgage payment, I applied for a cash-out refi with the same mortgage broker that got me the purchase loan, and am closing on the refi with a 0.125% higher interest with a $170k cash out this week.
The original purchase price was $920k, with $300 down.
Total cash invested=$300+$100=$400k,
COC before refi: $35,280/$400,000=8.82%
Current appraised value=$1.175m, new loan=$800k, cash out amount=$170k
Total equity gain=$75k,
COC after refi: $24,080/$230,000=10.47%
I am a rookie investor, and would love to hear any comments/questions on my deal and/ the calculations.
Thanks for reading!