How I bought a 12 plex with no money down!
Last year I was working with one of my 1031 exchange clients and I heard about a 12 plex for sale for $1.1 Million and it was a building that had been condemned but was almost fixed up and ready for a Certificate of Occupancy. We walked through the building and it was a 1906 hotel on Main Street in Longmont CO. My client was not at all interested in this construction zone property but something the seller said perked my ears up......the loan was a assumable owner carry at 4% interest only!!!
After offering it once again to my client and making sure he didn't want it, I called the other agent and put my offer in! $1.1 million with $200k down payment. Owner carry for 4 more years at 4% interest only payments. I ran the numbers and figured I could get $12-14k per month if we had the place fully rented. At a 7 CAP the new value fully leased would be $1.5-1.6 million! My problem was I had no money when I wrote the offer!
One of my realtor friends called me up and asked me if I had any properties that he could look at for his 1031 exchange. He had $150k to exchange. I asked him to look at this deal I had under contract and asked him if he would carry a note for $50k until I could pay him. He agreed. Then I went to the seller and asked if they could carry a note for $50k for 3 months while I gathered my funds! He agreed. We closed and I had arranged $15k in commissions to be paid to me so I walked out of closing securing 1/2 of the 12 plex and a check for zero Down!! I paid the seller off and my partner off and now I own the building with my partner! We are taking $2-3k per month in cash flow so I'm making a 24-36% ROI on my $100k investment. My equity position is about $350k.....my half of the $700k equity position!
Partner to make deals happen that you couldn't do yourself.
Be able to identify a deal
Don't Be afraid to ask to carry notes
Have friends doing deals
Be prepared to write a deal and tie up the property
Owner Carry financing is flexible and can be used when you have little to no money
Come to our meeting in Loveland CO on the 10th to learn more about creative financing and creative ways to structure deals! Posted in events in BP Events and Meet up group called Millionaire Real Estate Investors! Hope to see you there!