This is a 3 bed, 1 bath, brick construction currently rented in the Warrendale area. Warrendale has started to show popularity in the recent years due to its proximity to the affluent city of Dearborn for those priced out.
The tenant has lived in the property for over 10 years, providing stability, and is likely to remain long-term. Her rents were at $650 a month, but our team was able to get her to agree to a post-closing rent of $800 per month, much closer to the market rent of today. This makes the property an attractive investment with no CapEx, and immediate cash flow.
Property Details:
- Acquisition Date: August 9, 2024
- Acquisition Price: $55,000
- Capital Expenditures (CapEx): minimal, currently rented
- Comparables: up to $125,000. Comp 1, $80,000. Comp 2, $125,000.
- Renewed Rent: $800 per month
The strategy is simple; for now.
Purchase the property cash, perform some much-needed gutter work, and keep the tenant happy. Since the tenant wishes to stay long-term, meaningful updates and renovations can be deferred until she chooses to leave.
Investors will see this strategy repeated in future acquisitions.
Rented single-family properties are often less desirable on the resale market, as most buyers seek homes for themselves. These for-investors-only properties typically sell at a discount, often accompanied by deferred maintenance and below-market rents.
The MTMA Team’s long-term investment approach turns these challenges into opportunities.
Over our holding period, our partner property management team will proactively address maintenance issues and raise rents strategically.
While a few rented properties may not attract much interest, a portfolio of several hundred well-maintained properties at market rents will become highly appealing to institutional investors and conventional lenders alike.
Performance Highlights:
- Cash-on-cash return on total initial investment: 11%
On equity creation, we need to be realistic with this as-is acquisition.
This tenant has lived in this property for over 10 years, so the internals of this property are not undated, and therefore, not comparable to the finished qualities of the nearby properties utilized in the nearby sales records. The comparables given here show the potential of this property, and it is unlikely that this property would match the sales price of Comp 2, which sold at $125,000 with a good finish.
There will be capital expenditure necessary to bring this property up to where the best comps will be at.
We are a long term fund, and we believe that if the tenant stays for another 10 years, this property will continue to show extraordinary returns. For one, rented properties have no downtime, and this property is cash flowing from day one.