DALMATIAN REALTY OF SILICON VALLEY
125 TOPEKA, SAN JOSE
APARTMENT, SIX UNITS
ALL ONE BEDROOM, ONE BATH
SOLD: JULY 15, 2015
LEASING: JANUARY 1, 2016
BEFORE & AFTER
FINANCIALS
ACTUAL(seller) NEW OWNER(buyer)
SALE: July 15, 2015 REMODEL COMPLETED:
Jan. 1, 2016
SALES PRICE $1,245,000 $1,450,000*
RENTAL INCOME 90,468 133.200
EXPENSES: 19,489 40,489
NET OP. INCOME 70,979 92.711
GROSS RENT MULTIPLIER 13.76 10.9
CAP RATE 5.7% 6.3%
CASH ON CASH 9.2%
New Market Value of Property based on a modest Gross Rent Multiplier of 15………$1,998.000.
The Topeka six plex was bought by a pretty savvy investor. The buyer vacated all tenants and completely remodeled the building. Rents were raised from original condition market value of $1,400 per month to an after remodel value of $1,850 per month. Total cost of remodel was about $200,000 and this is reflected in Buyer price of $1,450,000*. I had presented the potential of this investment as reflected in my numbers at this site: Pro Forma as presented in listing!
I had many, many buyers look at this listing. All wanted to buy the property for substantially less than the list price. And….this is fairly typical of most buyer-investors. They want something that sells for a GRM of 10, property in good condition, fully rented and in good location. Let me tell you……such situations in this market don’t exist. Most buyers just don’t have the vision to see the potential!!!
This buyer did. And….now look at his numbers. They look great. And…he has an investment property which will yield a great return for many years. For all those that want to invest in real estate…..there is no free lunch. You must make it happen. I recommend to all to read Donald Trump’s, ‘The Art Of The Deal’. I read it just a few months ago and I saw the genius in Trumps method.
I present this information to investors as a tutoring mechanism to help them step back and look beyond the obvious. That’s how real money is made in real estate. Look at the capital appreciation that this buyer made after the remodel and new rental structure.
And by the way…..the seller got a great price too. He sold for a shade under GRM of 14, as is sale, had to make no repairs and we were able to invest his funds tax exempt through a 1031 exchange into five different triple net lease investments diversified by geography and real estate type.
This was a WIN-WIN deal. These are the type of deals I do.
Need to Buy, Sell or Lease
Silicon Valley Real Estate?
Dalmatian Realty of Silicon Valley
Luciano J. Ercolini, Broker/Owner
Landlord & Entrepreneur since 1977***** Realtor since 2000***** Broker/Owner since 2004
408-482-3438 dalmatianrealty@yahoo.com
**Includes closing costs and $200,000 of remodeling costs.