Rental Property Investor · Kalamazoo, MI · Member since 2015 · 15 posts · 9 votes
This post is to highlight the benefits of seller financing and building relationships with other landlords in your area.
Yesterday we closed on an $800k deal using seller financing with only $15,000 down. Details on the properties below.
1. Single family house near a college, previous owner bought it after it was in a fire last year, all new systems, basically new historic 100 year old house.
Purchase price: $195,000, $5000 down
Rented for $2000/month, monthly cashflow after expenses (including, taxes, vacancy, repairs etc) approx $350/month
2. Single family house across street from private college built in 2018.
Purchase price: $220,000, $5000 down
Rented for $2300/month, monthly cashflow after expenses (including, taxes, vacancy, repairs etc) approx $450/month
3. Duplex across street from private college built in early 2000s
Purchase price $380,000, $5000 down
Rented for $4000/month, monthly cashflow after expenses (including, taxes, vacancy, repairs etc) approx $650/month
In Summary, $8300 in gross rents added and $1450 in monthly cashflow, hows that for cash on cash return!
We just want to show people that these deals are out there! Let us know what questions you have!
@Rodrigo Barrera how do you go about seller financing and asking the seller to do it? Also what do you personally look into in order for you to be successful with this strategy.
Investor · Marin County California · Member since 2018 · 1k+ posts · 2k+ votes
6y
The stated monthly cash flow is about 10% of the total invested cash, meaning that the seller would have earned his $15,000 in about 10 months if he/she had not "sold" to you. Based on that, I assume he got pretty beneficial terms on this deal? May I ask what interest rate/loan terms you gave him?
Rental Property Investor · Kalamazoo, MI · Member since 2015 · 15 posts · 9 votes
6y
@Darius Ogloza i have done deals with this seller in the past at 6% interest, this one was at 5.5% due to size of deal, varying balloon payment terms, 30 year amortization. thats it, he mostly buys them rehabs them and also makes money on the back end financing, i have refinanced and cashed this particular seller on several properties within the first 1-2 years way before balloon payment is due.
Rental Property Investor · Kalamazoo, MI · Member since 2015 · 15 posts · 9 votes
6y
@Aaron Tavares Michigan and no not specific to just college towns, keep in mind this is a relationship we have been fostering for quite some time with this investor and have done previous deals with them
Real Estate Agent · Memphis, TN · Member since 2019 · 261 posts · 253 votes
6y
Man, you killed it! 5.5% at those terms sound like a win all around. They are out there for sure, but they require some work to get together, for sure.
Specialist · Easton, PA · Member since 2018 · 1k+ posts · 2k+ votes
6y
@Rodrigo Barrera
Call me crazy, but $1450/month cash flow on properties that you now owe $785,000 doesn’t seem great to me. I cashflow more than that on 3 properties I own, and owe about $110,000 combined.
The amount of down money was great for sure.. I’m not sold on the amount owed vs cash flow.
Rental Property Investor · Kalamazoo, MI · Member since 2015 · 15 posts · 9 votes
6y
@Matt M. i understand your point too but if we would have put down 20% ($160,000) they would would have cashflowed another $850/month.
I guess the point being that they still cashflow even when only putting $15000 down and 20-30 years down the road i have an extra $8-9k every month assuming rents stayed the same.