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Philip Williams
  • Rental Property Investor
  • Rockford, IL
702
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385
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four closings in four weeks pt. 1

Philip Williams
  • Rental Property Investor
  • Rockford, IL
Posted Jul 23 2014, 19:15

So my last post 7 building 20 units 18 months got a ton on support from the community. I didn't want to write what the actual numbers were until each closing actually went through. The first was yesterday on the six unit so i'll try and put as many details into this post as I can. Regardless of if this is a great deal a so/so deal or a bad deal which I certainly hope it's not lol, I hope it will help someone overcome the fear of there first deal. Or perhaps someone can learn from any mistakes I have maken. 

This building was found on craigslist as a six unit building for sale for 125k. I emailed the owner and asked about seller financing, he replied that it was something he would consider. I visited the property he actually agreed to a home inspection before I got it under contract. We agreed upon a purchase price of 110k, I was prepared to put down 25% on a land contract if need be but I certainly didn't want to put down that much. I asked him what he was using the money for and he needed 20k to put into a 12 unit he had just purchased.

I offered to put 20k down which ends up being about 18% which is less than I was actually prepared to put down and less than my bank would make me put down. We agreed upon a 7% interest rate and a 5 year term at which point if I couldn't secure financing he would continue to finance me. 

The total rents for the property are 3300 all six units are currently occupied. He provided the last year of gas and electric bills for me to review so I could figure out my actual numbers. With property management PITI, utilities, and cap ex I should be cash flowing about 900 a month. It may be slightly more but I put in a higher cap ex than normal because of a bigger building not completely gut rehabbed like my 3 duplexes etc.

I hope this info helps someone and if people are interested I will continue this for the next four weeks in new threads. Up next week 8/1 to be precise is the the four unit all one bedrooms! Wish me luck 12 units down 8 to go!

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