I’ve found a few Duplexes for sale and they have tenants already, ran the numbers & cash flow is great.
I’m having a hard time with funding as I am a new investor.
I do not have quite yet 20% down, maybe another 6 months and I could, but by then these properties will most likely be gone.
I’ve been unsuccessful in finding a partner or a private money lender.
Does anyone have any advice, opinion, or things that I could possibly try that I may have not tried or thought of to do?
I’ve also reached out to quite a few owners of duplexes/multi family properties if any were interested in seller financing and no one is.
I’m located in Eastern Iowa.
I might have to find a duplex with an open side to house hack to get started.
Any help is appreciated ! Thanks.
Do you mind sharing your underwriting?
Find friends, relatives, aquaintences with money sitting in CDS. Offer them 8% return with monthly interest payments. Easy as that. We bought a duplex a few years ago. I got a distant Family friend to loan me 90% and I got the seller to agree to a 1 year note(single payment) for the balance. We have owned them for a couple years. Decent cash flow. None of my own money. Refinancing as we speak to lower the interest and pay back the investor.
I have done many deals like this for SFR's as well. Great for me because I get to buy as a cash buyer, fast, no loan fees, no appraisals, no money down, and the investors are thrilled to get the monthly interest payments.
@Arlan Potter Sounds Great! Thanks for the reply. I’ll start asking around, I have a pretty small family but I got some people in mind. Thanks.
What legal forms do you use to create the agreement/arrangement between you and your family member ? How do you do your calculations and show them they're going to get a good ROI working with you?
@Brandon Levi Eagan I would recommend that you get the word out. If you know the role you intend to play in a deal, then advertise that role and make it clear you are seeking capital for these good deals. How many meetups do you attend or how many people do you tell about your goals a month? How many Bigger pockets posts do you do telling about your goals, asking questions and getting the word out?
Its a numbers game in real estate. You most likely haven't met the right people because you haven't been clear on your goals and/or spread the word enough. On the right track, now get to crushing it!
I use a simple promissory note and a standard mortgage to file. They get a good ROI of 8% and the security of a mortgage tied to a rental property. Collateral, security for their investment.
For Probly the last 45 days I haven’t shut up about real estate.
I’ve talked to family, friends, quite a few real estate agents, and have even talked to the majority of people at work, and no one has been interested.
In my area we have one local meet up once in a while and I missed the last event because of work.
I did find one great RE agent who owns 36 properties in my area but he seems to busy to help out someone starting out.
I will continue to spread the word and maybe work on a cover letter with my intentions Incase anyone shows interest.
I’ve also put out multiple posts on BP and 2/3 of them were asking for lenders/partnerships, I’ve had 1 person contact me and later said they weren’t interested at the moment.
I suppose I could seek to find out some local RE investors and try to get ahold of them?
I’m very motivated.
I know what I’m looking for and where and have found some deals just unable to deliver on the downpayment side.
Thanks again for the reply.
@Brandon Levi Eagan Sounds good so far. Start talking to the right people. Meet with like-minded investors, they will understand and your pitch will be easier. Read "Pitch Anything" by Oren Klaff. Build a Cover letter like you mentioned or what I like to call a credibility letter. Detail an example deal and include, show your deal skills. Join a real estate mastermind group and find someone experienced you can ask for advice. Then use said persons name, with their permission, as a credibility source on your credibility letter.
Really it is getting around the right people and demonstrating credibility. Returns are really a side issue. Credibility and Security of investment are key.
@Chris Levarek Will Do! Thanks for the book recommendation, will start reading Monday!
Also thanks for the advice. I’ll keep networking and getting to know the right people and working on this credibility letter. Thank you.
@Brandon Levi Eagan house hacking is not a bad idea to get started. Try networking at your local real estate clubs in your area. Look on meetup.com and search for the meetups in your area. There you will find local investors that could be potentials for you to partner with. Finding partners to fund your deals may take more time than you anticipate. This is a relationship driven business. Most people don't invest in deals just because they are good. They invest in other people, before they invest in deals. Hopefully you grasp this concept. Good luck
@Tj Hines I'm starting to understand that. It's more about the relationship than the ROI , at least until the relationship has been made.
I actually did look last night and found a meet up that’s 80 miles away and on a work night but I’ll make the drive to potentially build that relationship with people.
Thanks for your comment!
Share some numbers on the deals you potential are considering, let’s see what the figures look like.
@David Avetisyan There are multiple because seller is selling multiple duplexes in same area. He is an older man looking to sell all properties because of his age.
Example 1 - LP:$114,900
Both units occupied
Rent 700 Each unit
Tenants pay all utilities
PM charges 9% in my area and handles snow removal/lawncare
2 bed 1 bath units
Insurance $725 a year
Taxes estimated $1900 a year
Rough CoCROI 18%
Depending on numbers/downpayment and such
Any other questions ask away! Thanks.