Key facts
- Investor Ted Garber purchased three condos for $360,000 in September 2022.
- The properties generated $3,675 in combined monthly rent at purchase, meeting the 1% rule.
- The Garbers invested $113,548, including a 25% down payment, financed by a commercial loan.
- Current combined monthly rent is $4,530, with expenses including loan payments, property taxes, insurance, and HOA fees.
- Tenants have paid down approximately 12% of the loan principal over four years.
Florida-based investor Ted Garber acquired three occupied condos for $360,000 in September 2022, employing the 1% rule as a key screening metric. The properties, located about 90 minutes from his home, were initially listed at a higher price, but Garber successfully negotiated the purchase. He financed the acquisition with a commercial loan, putting 25% down and investing a total of $113,548, including transaction costs.
At the time of purchase, the condos generated a combined monthly rent of $3,675, which met Garber's 1% rule benchmark—a guideline suggesting monthly rent should be at least 1% of the purchase price for potential positive cash flow. Garber also identified an opportunity to increase rents, as they were below market rates.
Since acquiring the properties, the combined monthly rent has risen to $4,530. However, expenses have also increased, with HOA dues and insurance costs roughly doubling. The portfolio's monthly expenses include a $1,744.83 loan payment, $500 for property taxes, $408.78 for insurance, and $906.01 for HOA fees. Despite rising costs, Garber considers the deal "very healthy," noting that tenants have helped pay down $30,041 of the loan principal over approximately four years.
Garber's strategy involves keeping rents at or slightly below market to minimize vacancies and turnover costs, fostering good tenant relationships. He continues to seek similar deals, prioritizing properties with built-in equity and potential for improvement, even in a market with higher interest rates.