Abstract
This Project was prepared to recount and analyze my personal experience in acquiring, rehabilitating, leasing and disposing of a small income producing asset. The asset is a Victorian Italianate residential duplex, constructed in 1880 and located in midtown Sacramento. The Project explores the challenges facing undercapitalized and inexperienced investors and offers my strategy in leveraging a small savings to overcome these barriers. My recommendation will be determined by achieving two criteria 1) the project must return an after-tax Internal Rate of Return (IRR) of 20% and a positive after-tax Net Present Value (NPV); and 2) the potential for replication by similarly undercapitalized and inexperienced investors in a normal market. SOURCES OF DATA: Data were collected using a myriad of sources, including online research, correspondence with industry professionals, various publications and actual financial figures obtained through ownership records. CONCLUSIONS REACHED: The calculated after-tax IRR of the project is 208.15% and an after-tax NPV (20% required rate of return) of $109,155. Despite these large financial measurements of return, the project’s success was found to be heavily influenced by the favorable real estate market conditions of 2012-2014. As a result, the project is not considered to be replicable in a normal market, and therefore not recommended to all investors.