Our client was a new investor who just sold his duplex, and he would like to complete a 1031 exchange into a 5+ multifamily building. However, he searched through entire California and found it overwhelming.
We conducted a market study and researched over 12 cities of interest. Based on our analysis, we identified Stockton as the best candidate for an emerging market. We soon found a 12 unit apartment building, with rental rates of $500/unit. We conducted our 10-Year Cash Flow and IRR analysis and determined this property is an ideal value add investment opportunity. We negotiated down on the offer price and secured the purchase for $630,000.
Within 1 year of purchasing this property, our client was able to upgrade the building and increase the rental rate to $900/unit. We eventually sold the property for $1.1m within 15 months of ownership.