I'm under no illusions that you know who I am. I've been on Bigger Pockets for a couple of years now but never very active. Here's part of our story including live-in flips, a take-over, and a no money down apartment complex.
My wife and I bought our first house in 2008 for 40k and put about another 25k into. Two years later we sold for 119k. We took the money and put it into our next house that we bought in 2011 for 80k putting in about 30k and selling for 165000.
In the meantime we were presented with an opportunity to take over payments on a SFR valued approx 62k with existing payments of 475/mo no interest with balance of approx. 40k. We took it and held it for a couple years then refinanced it for about 30k. It is probably obvious that it didn't really make any money the first couple years essentially breaking even for that time.
Last year we bought our next house cash for 40k and we have no intentions of moving for a long time. We've put about 55k into this one and have a strong equity position with a no interest loan to a family member for about 50k for repairs.
We had been planning on increasing our SFR's for quite some time, but just couldn't seem to get any traction. Between life's distractions, and limited funds we just weren't getting anywhere. This year I decided that was going to change. It was about this time I listened to the BP Podcast with Grant Cardone and got fired up.
In April my wife and I were looking at furniture on craigslist one evening and my wife fell asleep. I decided to look in the business listings and found a 27 unit mixed property of mostly mobile homes with a duplex and a triplex. Asking price of 330k. I told my wife about it the next morning to which she responded by asking if I had 330k to buy it with. I responded "no, but who needs money to buy something?". She brushed it aside thinking it was another of my things that would go away in a week or so.
I kept my head down made a few phone calls and met out at the property with a banker who apparently didn't think I was crazy. I told him what I was willing to pay for the property after my analysis (don't even remember what that was now). We left and he got back to me a few days later after his analysis and said they would do the deal but recommended I look around and see what else was available. So glad I took his advice.
I found this little 8unit apartment complex but was a little confused. I found two listings for it one for 230k and the other for 200k. I couldn't tell how old they were but had my realtor check into it. The price had been dropped from the higher to the lower. Good news!
We entered negotiations offering 165k and settled at 180k which was as high as I was going to go. If they didn't take it I was walking. The bank took an equity pledge as down payment from our primary which the in-house appraisal came back around 145k.
Only 3 of the eight units were occupied and some work needed to be done on a few units. The tenants had lived there 16, 20, and 30 years respectively. We closed on the property the first few days of June with no out of pocket expenses.
We now have five units filled with three to go and are just about to the break even point right now. As soon as we get the next three filled its cash flowing approx 1100/mo for our company.
I'm keeping my eyes open even though I don't have any money. Thanks for reading. Keep your eyes open, you never know what you might find!
Great story! It goes to show you that persistence and creativity can go a long way!
Congratulations Aaron! Must be incredibly exciting. Way to be creative! Oklahoma?
Yes the apartments are in Tulsa.
Thank you Brie, it also pays to be open to new things. When my wife and I got married we said we would never be landlords and never live in a house we were fixing up, both of which we have done. But we wouldn't be where we are if we hadn't been open to change our mindset.
If you live in Mounds and the property is in Tulsa, how are you doing the apt. management (leasing, collections, etc)? My concern with these small complexes is that they are not big enough to have a full-time manager so that falls back to me (which I don't have time for).
Just curious how you guys are handling it.
I live about 40 minutes from the property. However I also work in Tulsa. My full time job right now is a plumber so for right now I have a very flexible schedule. I am doing the management right now. Once I have the property stabilised I may find an onsite manager to live in a unit for discounted rent. It just depends on how much the actual management takes which right now is minimal mainly fielding a few calls a day from prospective tenants. Once it's full it should be a few maintenance calls from time to time which either I can do myself or his or if I'm too busy. Hope that helps!
We are also using *********** to perform background/credit checks for us. Another plus is the tenant can pay rent online once you set it up.
Great story,indeed! I think one must be patient, and the opportunity will present itself ,all with time , trust , and desire...
Thank you Christine. Opportunities do indeed come with me but it's also important to create our own opportunities. We make our own "luck".
Can you explain the 'equity pledge' as the down payment?
As for the equity pledge we didn't have money for a down payment. We needed 36k approximately to make the deal happen. Since we had more than that in equity in our primary residence we backed the deal using equity. No equity was taken out and as soon as I have the property performing I can get it appraised at around 220-250k which will leave the balance on the loan below 80%. At that point the bank will release the equity from the house. Essentially it is security for the bank. If we defaulted on the apartments they would have equity in the house and get the down payment from us that way. Hope that helps.
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