In my earlier post, “Is the Market Shifting,” I highlighted three acquisitions. Here’s where they stand now:

1. Purchased at $97,000 (Listed: $105,900 | ARV: $175,000)
   We sold the identical property next door off market in March for $171,000 as a turnkey with $1,675/month Section 8 rent.  This one is a 4 bed/2 bath house but the agent mistakenly listed it as a 3 bed/1 bath so immediately, I knew there was an opportunity, hence the 91% offer per asking price. And, since I am acting as the buyer’s agent, that’s an additional 2.5% commission which lowers our cost basis to $94,575. The buyer of our next door sale has committed to this one at the same price, assuming we hit that rent target. Post-renovation, we expect a $23,000 profit.

2. Purchased at $80,000 (Listed: $127,500 | ARV: $160,000)
   The current tenant will be vacating at the end of July. We plan to renovate and either sell turnkey at $150,000 with $1,500/month rent for an estimated $26,000 profit, or refinance (BRRRR) and hold with $395/month cash flow.

3. Purchased at $60,000 (Listed: $85,000 | ARV: $130,000)
   With a rent target of $1,300, we can sell turnkey at full ARV for a projected $34,000 profit or BRRRR it with an estimated $420/month in cash flow.

Recent Sales & Turnkey Pipeline

We’re currently under contract to sell three turnkey properties this month. One of them, 1237 Birchwood St., was discussed in a previous post, “How to Find Free Property Rental Comps.” In that post, the minimum rent target was $1600. We secured a tenant at $1,675/month and a turnkey buyer will purchase it at $171,000. That deal alone will net us a $75,000 profit. This is a former low performing short term rental but with so much equity, the profit will be deployed exponentially funding renovations across two additional properties—one long-term and one short-term rental—with strong projected cash flow.

Shifting Short-Term Rentals Back to Long-Term

We are converting another three underperforming short-term rentals to long-term rentals. Rather than keeping them, we already have turnkey buyers lined up to purchase them. The proceeds from these sales will allow us to pay off the existing portfolio note on remaining properties, creating free and clear assets with strong monthly returns.

Owning properties outright not only increases cash flow but gives us leverage to secure credit lines with local banks. This allows us to acquire more properties with true cash purchases, avoiding hard money costs. Renovated properties are then either sold turnkey or refinanced into our long-term portfolio, depending on the final costs of renovations.

Leasing Activity & Rent Growth

We recently turned over three rentals and signed new leases last week at $1,425, $1,350, and $1,300, adding $4,075 in gross monthly income with an estimated 12.5% cap rate.

We’re also working aggressively with Section 8 to adjust rents to current market levels. Many of our properties were purchased years ago, and while we’ve maintained solid cash flow at our lower cost basis, rising taxes and insurance have made rent increases necessary.

One standout: a Section 8 rental  in the Ensley neighborhood (a C class area) just South of downtown has a current loan balance of $78,000. In 2021, the Section 8 approved rent with the new tenant was $900. It bumped up to $950 in 2023, and was just approved for $1,450/month starting July 1. That’s almost a 54% increase. Most importantly, it generates a  15% cap rate with $527/month cash flow. Though we could sell it for a $41,000 profit, the cash flow makes it a keeper. 

Looking Ahead

We’re staying focused on sustainable cash flow and conservative acquisitions while continuing to monitor market trends. if the market does indeed shift in to bear territory, we will see a continuing softening of prices. This allows us to pick up additional properties at desirable prices and either keep them as rentals or flip them turnkey.

More updates to come—stay tuned.