Revealing My ENTIRE Real Estate Investment Portfolio | 2021
In this blog, I'm going to break down the value and debt associated with every single one of my current real estate investments.
There are 7 properties in total so let's dive right in.
The first property is the 4 family home I bought back in January 2020.
This property appraised for $589,000 back in March of 2021 and as of December 2021 we owe $437,444.20.
That leaves us with a positive net worth of $151,555.80.
I don't have any money left in this property so this equity is pure profit.
My plan for this property is to use it as an education fund for my first child.
By the time she is 22 years old and potentially done with college, the mortgage will be paid down to $195,000
At that point, I will refinance the property to pay for her education in cash.
If the property value increases by 1% per year over the next 21 years, we should be able to appraise for $726,000.
If we refinance at 75% Loan to value, we'll be able to put a new loan of $544,500 on the property.
After paying off our existing loan of 194,745, our cash out of the deal will be $349,755.
Hopefully that covers the cost of her education.
The second property in my portfolio is the 3-family home I bought back in September of 2020.
That property appraised for $320,000 back in September 2021 and we just refinanced into a new loan in the amount of $256,000.
That leaves us with a positive net worth of $64,000.
I don't have any money left in this property either so this equity is pure profit as well.
I almost sold this property a few months ago before I changed my mind and decided to refinance into long term fixed rate debt.
I actually made a video about my decision to sell this property so if you're interested in watching that, I'll link to it at the end of this blog.
The third asset is a 4-unit mixed use property we bought in March 2021.
We used 100% debt financing on this property for the purchase as well as the rehab and our total loans currently amount to $360,000.
We have yet to request a formal appraisal on this property, but in my opinion, the value should come in at or above $600,000.
If my valuation is correct, we currently have $240,000 of equity sitting in this property.
Here's how I got to my valuation.
Since this is a commercial property, we have to use net operating income and cap rate to determine value.
Net Operating Income is a function of Revenu
Our rent roll for this building is $5,862 per month.
After accounting for vacancy expense, we expect to collect $5,628 per month.
Our fixed and variable expenses come out to roughly $2,290 per month, which leaves us with a net operating income of $3,340 per month or $40,000 per year.
Based on various cap rates ranging from 6% to 7.5%, I think this property averages out to a value of $600K.
Since this is a commercial property, we're having trouble finding decent loan terms for a refinance.
Right now, the best rate I can achieve for a 30 year fixed rate is 5.75%.
If I want a rate in the low to mid 4's I have to get a commercial loan which has a 5 year payment term and is only amortized over 20 or 25 years.
I don't want to deal with refinancing again in 5 years.
If I can't find a 30 year fixed rate loan in the low 4's by the end of Q1 in 2022, we will likely list this property for sale and roll the profits into another deal.
I've been itching to do a 1031 exchange so I'm sort of hoping we don't find attractive financing.
The 4th property in my portfolio is a Duplex we bought in June of 2021.
We used 100% debt to finance the purchase price of $485,000.
We're currently under contract to sell this home for $560,00
Technically, our positive equity here is $75K, but this is where things start to get a little hairy.
Although there's $75K in equity on this property, we'll be lucky to clear $15,000 in profit on this deal after the sale.
The biggest reason we are losing all that equity is the amount of time it took to sell.
We held this property for way too long considering our business plan was to flip it immediately.
Between taxes, interest and insurance, our holding costs on this property are about $130 per day.
We wanted to be in and out within 60 days, but it ultimately took us 6 months to offload it.
That's an extra 120 days of carry that ended up costing us an additional $15,600.
After paying realtor fees, transfer taxes, and all of the other hidden costs that come with buying and selling property, we'll be lucky to clear $15,000 in profit. That's about 20% of the equity.
We'd likely be much better off if we simply held onto the property and refinanced into long term fixed rate debt, but that was never a part of the business plan so we're going to take it on the chin and remember this lesson for our next wholetail opportunity.
Which brings me to the next two properties that I JUST closed on.
Livingston High St
These are two properties that we acquired off-market with the sole intention of immediately reselling.
We bought Livingston for $445K and High St for $410K.
Our lender's appraisal for Livingston came back at $500K and at $475K for High St.
We also got BPO's done on both by realtors and the values came back even higher.
Based on the comps, local realtors believe both properties can get $525K as-is.
If we use the conservative appraisal values, we have 120K of equity across both assets.
It goes without saying, we used 100% financing on both of these properties as well.
After factoring all of the costs associated with buying and selling these properties, I am looking forward to making just under 6-figures on these exits.
The last property in my portfolio is my new construction project.
I bought this property for $523,900 and the as-is appraisal came back at $575,000.
Based on these two figures alone, I have 51,100 in equity on this property.
However, I also have another $525,000 in construction financing on the backend of this loan.
Once we're done with this house, I, as well as the appraiser, believe it'll be worth $1.5M.
At that point, the equity position will be massive.
1.5M ARV - $524K Purchase Price - $525K in Construction Reserve - $100K in carrying costs leaves roughly $350,000 in equity in this one property alone.
Which brings my grand total of equity to $1,000,555.80.
It sounds nice to be a millionaire on paper, but it's also incredibly stressful.
I have SO much Debt in my name.
I'm not too worried about Champion, Walnut, or Scott St because they're cash-flowing assets that have a debt service coverage ratio of 1.5 or higher on long term fixed rate loans. Even in the worst economic conditions, these assets will continue to pay for themselves.
Across those 3 properties, I have a little over $1M in debt.
??????However, the last 4 properties are all speculative in nature. The business plan for all of them is to buy low and sell high, and I financed 100% of these acquisitions. The total debt across these 4 properties is $2.49M.
At an average rate of 8%, it will cost me roughly $16,500 per month in interest alone to service this debt.
At the same time, I'm looking to offload 3 of those 4 properties in the next 45 days so the stress will hopefully be short-lived and the risk will be well worth it. Time will tell.