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Now for the second year your focus is to keep the property at current market levels of occupancy. As you spent many hours researching the area and you know the growth calls for an increase of rents of 4% (now going from $628 to $653). Now it is time you start thinking of selling. You spend another $5K in improvements and make sure to list it with a great broker. Given that the area has improved and the property has better occupancy rates, you can list it asking top dollars for it. In the case that the CAP Rates have not improved in the area (not likely as the area is in better shape, the economy is improving, and the rents have increased) you would still sell making a profit of $202K.
Analyze his investment from the financial perspective, you will see that you made 100% in two years. And this is happening with just 20 units.
I ran the numbers for different size of properties. And this is why multis look like the perfect vehicle to me. Here are the numbers:
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