Rental Property Investor · St. Paul, MN · Member since 2016 · 3k+ posts · 3k+ votes
We recently purchased a 120 unit value add apartment community and got the seller to finance. This was a distressed asset with 78% occupancy, needing over $500k in renovation. The option was to close with a bridge loan or to convince the seller to be the bank, saving us close to $350,000 in fees and interest.
This deal was an off-market deal that my company put under contract and convinced the seller to finance a construction type loan. We syndicated the down payment and remaining renovation budget as well to make this deal what I think will end up to be a really solid investment.
Raleigh, NC · Member since 2017 · 347 posts · 94 votes
8y
Nicely done! congrats. but if they were able to give you a construction loan, why did they not just put the money into the rehab (granted, they were already at it for 3+ years)
Nicely done! congrats. but if they were able to give you a construction loan, why did they not just put the money into the rehab (granted, they were already at it for 3+ years)
They didn't give me more money than what I paid for. We put the construction funds into escrow and only gave them a small down payment. The escrow is drawn upon by us as we complete construction. If we default they get that money.
So down payment was roughly 8%. Then the remaining money they would normally get as a down payment didn't go directly to them. It went to the escrow account that we can access as construction is completed.
Investor · Indianapolis, IN · Member since 2017 · 62 posts · 38 votes
8y
Todd Dexheimer , great success and fantastic use of creativity! Thanks for sharing your experience for all of us to learn from! Best of luck with this new asset! I look forward to hearing how it pans out over the hold.
@Todd Dexheimer so awesome! I’m looking for similar deals!
They are out there. It is definitely not going to be every deal, and I think most likely they will be off market deals, but one thing I’ve learned over the past three deals that I’ve done seller financing is that you need to ask in order to get it. Most people that say it can’t be done just never have asked
Flipper/Rehabber · Minneapolis, MN · Member since 2016 · 1k+ posts · 1k+ votes
8y
Great blog post. We executed a similar strategy on a 4 unit my brother recently purchased. Found out why he was selling, what he needed, and structured 100% seller financing to get it to work. He had no intention of purchasing or even bringing up seller financing but it became an option after asking the right questions.
Great blog post. We executed a similar strategy on a 4 unit my brother recently purchased. Found out why he was selling, what he needed, and structured 100% seller financing to get it to work. He had no intention of purchasing or even bringing up seller financing but it became an option after asking the right questions.
Nice work! Most people would’ve just walked away from that deal, figuring it wouldn’t work.
Great blog post. We executed a similar strategy on a 4 unit my brother recently purchased. Found out why he was selling, what he needed, and structured 100% seller financing to get it to work. He had no intention of purchasing or even bringing up seller financing but it became an option after asking the right questions.
Nice work! Most people would’ve just walked away from that deal, figuring it wouldn’t work.
In our case - my brother was planning to purchase on a conventional loan - just didn't have to! Kept his money in his pocket.