Fourplex with below market rents with STRONG cash-flow for experienced investors!
About the Area
- Chattanooga, Tennessee, is an increasingly sought-after destination for both employment and real estate investment.
- The city is home to major employers like Volkswagen, Amazon, and UNUM, which have significantly contributed to its robust economy and low unemployment rates.
- Chattanooga's strategic location within the “Chattanooga-Nashville Corridor” has established a strong economic relationship with the larger Nashville metropolitan area.
- This relationship further enhances the city's appeal by providing access to a broad network of businesses, industries, and resources.
- The area has experienced remarkable growth, with ongoing developments and revitalization projects that have attracted new residents and businesses alike.
- Chattanooga's focus on sustainability, quality of life, and scenic beauty continues to make it an attractive choice for those looking to invest in real estate and establish themselves in a dynamic, economically linked region between two of Tennessee's most promising metros.
Your Opportunity
Investing in a fully rented 4-plex with all units currently occupied and rented below market value presents an enticing opportunity: (Current rents $4000/mo and Market rents $4600-$4800/mo)
1. Immediate Cash Flow: With all units leased, you'll start generating rental income from day one, providing a steady stream of cash flow. Once refinanced to 6.0%, this property will cash flow at ~$900/mo!2. Income Growth Potential: Since the units are rented below market rates, there's ample room to increase rents over time, boosting your income.3. Reduced Vacancy Risk: A fully occupied property minimizes the risk of income loss due to vacancies, ensuring a consistent return on your investment.4. Equity Building: As you raise rents to market rates, the property's value should appreciate, potentially creating equity that you can leverage for future investment.5. One purchase – 4 “houses”: Experienced investors often find the option to purchase multiple doors/units in a single transaction, all under one mortgage, to be a highly efficient way to grow their real estate portfolios. This streamlined approach allows them to expand their investments more effectively and manage multiple properties with ease.Investing in a fully rented 4plex, especially when there's room to increase rental income, can provide a strong foundation for building wealth through real estate investment.
Before you decide to purchase a four-plex, it's essential to hear Dani Beit-Or's insights on the advantages and challenges associated with such an investment. This will help you make an informed decision about whether a four-plex is the right opportunity for you: bit.ly/Buying-4-Plexes
About The Property
| Property Specifications | 4 | Per Door |
| Bedrooms | 8 | 2 |
| Bathrooms | 4 | 1.0 |
| Square Feet | 4212 | 1053 |
| Year Built | 1972 | |
| Garage Size | 0 | 0 |
| Schools Rating (on scale of A-C) | B |
| Purchase Assumptions | My Offer | Per Door |
| Offer used for analysis | $590,000 | $147,500 |
| Suggested offer (low) | $580,000 | $145,000 |
| Suggested offer (high) | $590,000 | $147,500 |
| Asking | $599,000 | $149,750 |
| Market Value (after improvements) | $612,500 | |
| Improvements (lower) | $12,000 | $3,000 |
| Improvements (upper) | $16,000 | $4,000 |
| Closing Costs | $5,900 | |
| Mortgage Costs | $8,850 | $2,213 |
| Other Fees At Closing (pts, . . . ) | $4,130 | 7% |
| Total Cost | $622,880 | $2,213 |
| Original listing date | 10/13/23 | |
| DOM (days on market – TODAY) | 26 |
| Financing Assumptions | |||
| Down Payment (%) | 30% | ||
| Down Payment Amount | $177,000 | ||
| Financed Amount | $413,000 | ||
| Interest Rate | 7.625% | ||
| Mortgage Term (Years) | 30 | ||
| Monthly Mortgage Payment | $2,923 | ||
| Cash Outlay (Total Out of Pocket) | $209,880 | ||
| Financial Assumptions | Monthly | Yearly | |
| Rent (market) | $4,700 | $4,800 | $57,600 |
| Rent (low) | $4,600 | $55,200 | |
| Property Tax Rate (Approx.) | |||
| Property Taxes | $164 | $1,968 | |
| Insurance | $240 | $2,880 | |
| Repairs | $340 | $4,080 | |
| Property Management Monthly (%) | 8.0% | ||
| Property Management Monthly ($) | $376 | $4,512 | |
| Leasing Fee | 50% | $97.9 | $1,175 |
| Owner Paid Water | $150 | $1,800 | |
| Vacancy Rate | 4.0% | ||
| Total Fixed Expenses | 33% | $1,541 | $18,491 |
| Total Expenses (Fixed + Mortgage) | $4,464 | $53,569 | |
| Financial Analysis / Deal Attractiveness | |||||
| Years: | 5 | 10 | 15 | 20 | |
| Cap Rate | 2.6% | 4.3% | 6.2% | 8.3% | |
| Net Cash Flow | $27,126 | $89,927 | $194,441 | $347,703 | |
| Equity Increase | $154,450 | $347,706 | $590,647 | $897,649 | |
| Total Gain | $181,576 | $437,634 | $785,087 | $1,245,352 | |
| Average Cash Flow/Year | $5,425 | $8,993 | $12,963 | $17,385 | |
| Average Cash Flow/Month | $452 | $749 | $1,080 | $1,449 | |
| Average Gain/Year | $36,315 | $43,763 | $52,339 | $62,268 | |
| Average ROI | 86.5% | 208.5% | 374.1% | 593.4% | |
| Annual ROI | 17.3% | 20.9% | 24.9% | 29.7% | |
| Projected Property Value | $745,200 | $906,650 | $1,103,078 | $1,342,063 | |
| Property Ratings Suggestions | |||||
| Item | Suggested Criteria (Min.) | This Property | FAVORABLE / INSUFFICIENT | ||
| Schools | B | B | FAVORABLE | ||
| Square Feet | 1,000 | 4,212 | FAVORABLE | ||
| Bedrooms | 3 | 8 | FAVORABLE | ||
| Bathrooms | 2 | 4 | FAVORABLE | ||
| Year Built | 1970 | 1972 | FAVORABLE | ||
| Rent/Price (%) | 0.75% | 0.81% | FAVORABLE | ||
| Average Cash Flow (at year 5) | $125 | $452 | FAVORABLE | ||
| Average ROI (at year 5) | 15% | 17.3% | FAVORABLE | ||
