Fourplex with below market rents with STRONG cash-flow for experienced investors!

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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:
About The Property
Property Specifications4Per Door
 Square Feet42121053
 Year Built1972 
 Garage Size00
 Schools Rating (on scale of A-C)B 

Purchase AssumptionsMy OfferPer Door
Offer used for analysis$590,000$147,500
Suggested offer (low)$580,000$145,000
Suggested offer (high)$590,000$147,500
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, . . . )$4,1307%
Total Cost $622,880$2,213
Original listing date10/13/23 
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 AssumptionsMonthlyYearly
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 Fee50%$97.9$1,175
Owner Paid Water$150$1,800
Vacancy Rate 4.0% 
Total Fixed Expenses33%$1,541$18,491
 Total Expenses (Fixed + Mortgage)$4,464$53,569

Financial Analysis / Deal Attractiveness    
 Cap Rate2.6%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 ROI86.5%208.5%374.1%593.4%
 Annual ROI17.3%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 PropertyFAVORABLE /
 Square Feet  1,0004,212FAVORABLE
 Bedrooms  38FAVORABLE
 Bathrooms  24FAVORABLE
 Year Built  19701972FAVORABLE
 Rent/Price (%)  0.75%0.81%FAVORABLE
 Average Cash Flow (at year 5)  $125$452FAVORABLE
 Average ROI (at year 5)  15%17.3%FAVORABLE

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