My Third Deal, Another 4 Plex

16 Replies

Hello Bigger Pockets members. I am just sharing information about my potential third deal. The property is a 4 unit located in Tucson, Arizona. 

A little background first. Last year I bought my first two properties, a 4 plex in Phoenix, AZ which I bought with a conventional mortgage and 25% down payment, and a 4 plex in Tucson, AZ which I bought with an FHA loan and 3.5% down payment and owner occupy. The person that I bought the 4 plex in Tucson from actually owns another identical 4 unit property right next to the one he sold me.

So every once in a while I would see the guy as he fixed things and collected rents from his tenants. He often expressed how he was sick of being a landlord and was ready to sell the other property as well. Anyway fast forward to today and I tell him that I want to buy the other property from him. He agreed to owner finance the property with 20% down, 5.5% interest with 30 year amortization, and a 5 year balloon. Since I already own the property right next door, I know the price and cash flow are good, even though I will be paying a little bit more than I paid for the one I purchased last year. Also I am able to get around all of the bank's mortgage rules by owner financing and get into my third property a whole lot sooner than expected. 

Purchase Price $170,000

Down Payment $34,000

Interest Rate 5.5%

4 units, built in 1986, 800 square feet per unit, 100% occupied, Class C

Tucson, Arizona

Monthly Rent $2400 ($600 per unit)

Tenants Pay All Utilities

Property Management 7.5%, $180/month

Insurance $800/year (based on what I pay)

Taxes $1200/yr (based on what I pay)

Originally posted by @Andrew LeBaron :

Muy bien amigo!

How close is it to UOFA campus! ?

 It's probably 1.5 miles from U of A, but the tenants aren't college students, but lower income working class. It is near I-10 and Speedway, if you know the area. 

Ok an update. I got the property under contract with $1000 earnest money last week. I just scheduled the inspection for early August with a close date of September 1st. 

I'm getting excited. At that point I will have 3 properties, 12 units, $81,600/yr in gross income with the properties valued at around $510,000. All in my first 1.5 years. I set a goal when I started to buy $1 million in investment real estate in 5 years and I am half way there.

Originally posted by @Anthony Gayden :

Ok an update. I got the property under contract with $1000 earnest money last week. I just scheduled the inspection for early August with a close date of September 1st. 

I'm getting excited. At that point I will have 3 properties, 12 units, $81,600/yr in gross income with the properties valued at around $510,000. All in my first 1.5 years. I set a goal when I started to buy $1 million in investment real estate in 5 years and I am half way there.

 You're a true inspiration Anthony, congrats.  I love seeing it CAN be and IS being done in Tucson,  I hope everything goes well. Get's me fired up!

Originally posted by @Kelly N. :

Awesome!  Great job, and it'll be nice to have two so close together!  

 That is exactly what I was thinking. It will make management so much easier. There are other small multi-family properties in the same neighborhood and in the future I may look at acquiring those as well. 

That's great @Anthony Gayden !  We are under contract on #4 and #5, and they are next door to each other as well.  Our first one is about a block away and the other two are a few blocks away and close enough together that I can show people apartments at both if I have similar units coming up.  I love being able to drive by everything within a few minutes!

This is awesome Anthony. I was wondering what the plan is in 5 years when the balloon hits? My understanding is it would be refinanced with a traditional lender? If that is the case have you heard if there is a limit to how many investment properties you can have? Is it a concern that when the balloon hits you wont be able to pay the seller in full? I am EXTREMELY curious about this because I would love to utilize this tool of seller financing. I am currently attempting to buy a foreclosure in Vail for a live in flip with a VA loan. Most likely stay there 2 years to avoid capital gains and attempt to sell it for a profit. I did work the numbers so I would be able to cashflow it a little bit in the event that I dont sell it for a profit. Again, Congrats! Your story truly is an inspiration. You are following the path I want to go down!

Unfortunately, this deal fell apart due to me moving across the country.

https://www.biggerpockets.com/forums/48/topics/222507-third-deal-falls-apart

@Anthony Gayden thanks for keeping us updated and sorry to hear about the third deal falling apart. Sounds like no deal is better than a bad deal since you needed the cash.

You mentioned you owner-occupied one of your existing 4 plexes.

Can you tell us more about how you handled landlord duties and being the owner while living with your tenants?

Free eBook from BiggerPockets!

Ultimate Beginner's Guide Book Cover

Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!

  • Actionable advice for getting started,
  • Discover the 10 Most Lucrative Real Estate Niches,
  • Learn how to get started with or without money,
  • Explore Real-Life Strategies for Building Wealth,
  • And a LOT more.

We hate spam just as much as you