Zovest - Value-Add Apartments and Land Development
  • What We Do
  • How it works
  • Blog
  • About
  • Contact
  • Investor Portal

Comparing Single-Family vs Multi-Family investments in 3 different scenarios - Part 2

2/28/2019

0 Comments

 
Real World Scenario #2

2.1 Buying a investment home in Bay Area, CA with cash in auction
​     vs
2.2 Buying a 59 unit apartment complex in Jacksonville, FL with leverage


2.1 Buying a investment home in Bay Area, CA with cash in auction

I don't want to name, but i have my friend who bought a condo as investment with cash in auction at the court house for 700k in Dublin, CA. And he is the process of buying another home for 850k in San Ramon, CA. His intention was to get some cash-flow and primarily betting on Bay Area home appreciation.

When i asked him more questions and details about how much he will make on the condo, he started explaining me that he earns $3000 rent per month. But he didn't take into consideration that he needs to pay property taxes, HOA dues, maintenance and also factor in vacancy/ turn-over costs in case tenant leaves. Lets take in this example he can get $2000 of cash-flow per month.

Lets take the San Ramon home example as the numbers are close to the comparison which i am going to do. His intention is to buy a single family home for cash in San Ramon, CA for 850k and rent it out. If we assume it rents for $3500 he can get $2500 of cash-flow per month.

From appreciation perspective lets assume the San Ramon Single Family home appreciates to $1.1 Million in 5 years (Which is anyway difficult at this market cycle).

So total of $2000 * 60 months = 120k in cash flow + 250k in appreciation = 370k of total profit. 

2.2 Buying a 59 unit apartment complex in Jacksonville, FL with Freddie Mac loan

As i said all these are real world examples, i need to pick the property we have bought from Zovest. I cannot pick sample deals here.

We bought Casa Grande Apartments in November 2018 for $3.4 Million with 81% 10-year loan from Freddie Mac with 5.01% interest rate. Our down payment was close to 700k and 156k for rehab + working capital. Total raise was 856k.

In this scenario the returns will be average 12% with cash-flow of average 100k per year and appreciation and principle payments of 500k the total profit is $1 Million after 5 years hold. And also we did our cost seggegration study and got 1st year bonus depreciation of 710k for Casa Grande which is cherry on the top :)

This is only possible due to value-addition happening using the 156k rehab budget to renovate all units and raising rents to market. 

    Verdict for Scenario #2

Submit
Picture
Projected Cash Flow analysis for Casa Grande Apartments by Zovest when bought by a singel individual.
Picture
Total return projections of Casa Grande Apartments after its sold in 5 years.
0 Comments

    Archives

    June 2022
    November 2021
    October 2021
    September 2021
    June 2021
    May 2021
    April 2021
    March 2021
    February 2021
    January 2021
    November 2020
    September 2020
    June 2020
    April 2020
    March 2020
    February 2020
    January 2020
    December 2019
    November 2019
    September 2019
    August 2019
    June 2019
    May 2019
    March 2019
    February 2019
    January 2019
    December 2018
    November 2018

    Categories

    All

    RSS Feed

Links

Home
What We Do
How it Works
Blog
Investors

Contact Us

Contact Us

Subscribe to our Newsletters

* indicates required
Zovest Capital, LLC.  Copyright 2020.  All Rights Reserved
  • What We Do
  • How it works
  • Blog
  • About
  • Contact
  • Investor Portal