The Pool C Rehab Fund achieved its first sale of 2022 on Jan 5th, with an impressive 73% ROI on the Chama project. Additionally, this was one of six (6) projects in our real estate portfolio that was purchased in the second half of 2021 as part of our B-R-R-R-R (Buy-Refi-Rehab-Resale-Repeat) strategy.
The Chama remodeling project was a conversion of a 2BR/1BA home with an adjacent studio apartment into a 3BR/2BA single family home. As is typical on this kind of project, all the 70s-era wall paneling was removed and all interior fixtures in the kitchen and baths were replaced, along with new flooring and interior/exterior paint.
On one hand, 73% ROI seems like a big number, but remember that we leverage our rehab projects with a hard-money line of credit. However, we didn’t buy the project with $105K cash and make 73% on that amount; we made 73% ROI on our downpayment. But with leverage, instead of buying only one project at a time, we can buy 5+ projects. More projects means more profit and that keeps our investors happy.
Real Estate Portfolio Strategy
Our average net profit expectation per project is $30K; some make more and some make less. But, if the resale market remains stable, we expect to complete 12-15 projects this year — that’s $450,000. In addition, we have two projects selling this month. Plus, we’ve already bought two more. And as if that isn’t enough, we’ve got two additional properties under contract for next month.
Our bread-n-butter is to always have two or three projects in the pipeline. We’re always looking for special opportunities like a high-profit “golden unicorn” or an apartment building rehab.
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