My 2015 Goal : 50 Units by end-of-year
Current portfolio metrics :
10 Properties
15 Units
17.15% Un-levered ROI average per home
56% Average equity increase per rehab
This is a hybrid kind of portfolio. Our plan is to buy SFD & Multi-Family properties from now till around 2016-2017, at which time we plan on liquidating SOME of the SFDs to pay off some of the underlying debt that we will accumulate through the process. This is of course if the market sees appreciation. If we don't see large amounts of appreciation (And are unable to purchase properties that don't hit our minimum of 14% ROI).
In 2014 we added 8 properties for a total of 13 units.
Unlike many rehabbers, we "Do all our own work" in a sense that I don't contract all the labor out myself. My goal has been to try and do all the work internally on our properties so we can add even more equity to each deal via wholesale labor. This has worked out AWESOME as we've increased our net equity in each deal by 56% over each purchase. Many people ask us "Why not just flip them", however at the time we can refinance the property for 80% LTV based on the post-rehab value. This allows us to cash them out for more than what we paid, pay that money forward on the next property while still collecting fantastic residual returns.
Right now we're in contract for 2 properties, they are expected to close the first part of January 2015, so these will be added to the 2015 goal. This will bring us to a total of 12 properties @ 17 units.
With a rate of 1.5 units per property in 2014, we will need to raise this significantly in order to hit the 50 unit goal. If we are able to purchase & rehab a total of 15 properties at an average of 2.33 units per property we can hit this goal. This would best be achieved by getting a few quads or higher unit count properties (Commercial rather than MF residential). We do have a 4plex and 5plex we are looking at purchasing next year, which would take us to 26 total owned units.
The hurdles we expect to deal with will be primarily on the financial side, dealing with taking out equity on properties we already own for cash. Even though we have fantastic equity in our properties, banks are still somewhat slow to lend. We will need roughly $750k-$1.25m to hit our unit goal over the next year. This is a good deal of debt to take on in our area.
In this post I'll be detailing what kind of deals we look at, purchase and the various problems we encounter to hit our 2015 goal!