Advice on creative deal?

24 Replies

Hi everyone! My husband and I own one single family home in Jacksonville, Florida. We are looking to purchase another using the BRRRR strategy that BP loves to talk about. While looking for these homes, I ran across an agent who’s client is looking to sell off 12 rental properties in the area all around 50K range or so with work required on some. He has a huge portfolio and wants to start selling it off. I am trying to think of how I can acquire all 12 creatively, but I’m kind of stuck. We don’t have a ton of money to put down, maybe 15k total. We do have the other house as an asset but we just bought it in February so there’s not much equity there. Maybe some sort of lease to own? Any ideas that some of you have tried and succeeded with? Maybe it’s foolish to think of acquiring all 12 but I’m ready to move on and do this full time. It would be amazing to have this many in one shot! Any and all ideas are welcome. Thank you so much!

I would think you would like to do an equity investment.  You bring the deal to someone and they pay the closing and down payments for a percent of the deal 3-5 years refi to buy them out.  I have seen equity deals at 5-9% interest, 10-40 Equity, and closing at 5%. 

check the properties over very closely. A lot of investors trying to sell overpriced houses in package deals in jacksonville currently...not sure why but I see a lot of it...usually junker houses 

I agree with Mark; look over the properties very closely.  Those package deals like to have 1 good property to get you excited and multiple junk units they want to offload. 

I think you should analyze the 12 properties and see how many are worth pursuing. After that you'll know how much money you need to come up with and can figure out a way to get it.

@Elenis C. As others have said, be careful with these types of package deals. Analyze each property separately and have an exit strategy for each. Is the seller interested in financing them? You're looking to purchase $600k worth of real estate and only $15k in the bank so you'll have to come up with something creative. Conventional/hard money lending won't get you there without a ton of experience.

@Mark Fries Thanks! I'll definitely check all the houses. The seller is actually looking to sell them individually. I found one house and the realtor told me he's selling some of his portfolio off so I asked to send me all of the houses just to see if we can acquire more at once. 

@James R. @Jason D. Thanks for the input. He's not looking to sell them in a package deal. I actually just found one house and the realtor told me that his client wants to sell 12 of them. I was the one that asked to have all of the listings so that I can look at them all. For sure I'll look at them all closely and see which, if any, make sense!  Jason yes I know it's very hard to purchase that much with only 15k in the bank, that's why I needed ideas  :)  I don't even know if it's possible, but I'll try if it makes sense. 

As you likely know there are some questionable areas in Jax so look them over for condition and location.  It would be good to know the seller motivation, if it is an older investor that property manages as well he/she may just want to step away from the day to day and could be okay with owner finance (OF).  OF could still provide steady income while also not requiring all the capital gains tax up front.  I'd try straight owner finance first (make sure you show the broker how they will get paid if you want him to support IF to the seller)..second Id try as Master Lease Option which is just another form of OF and lastly if the deal is good enough you can get an equity partner

keep us posted  -  b

As mentioned before Owner Financing can be good if available or you can find a partner.

If you find multiple good units then maybe you can negotiate a package deal for better pricing. Then sell of one or more of the deals to another investor in exchange for the down payment money needed on the other units. If all works out you get multiple units with little to no money out of pocket.

If you have money in a 401k you can take out a loan and pay yourself back with interest. You'll want a good cash on cash return to compensate for that money being temporarily pulled from the market.

@Elenis C. Go look at the house he’s got cherry pick the best one and try to get him to do a “ land contract” on the house aka seller financing. Tell him you’ll do 15k down and X amount each month with interest over X amount of years .

If it were me, I'd walk away from the deal. Prices are near the top and have been pushed hard, continue to rise in Jax. Median Sales Price in Jax is up 10.3% year over year, June 2017 vs June 2018. 

 Just this week sales in California reached their peak and fell 11% month over month. We're getting to the top nationwide. I would not want to hold 12 notes in a falling market and then be at the mercy of your money people. 

Sometimes slow and steady is good enough and you can sleep adding one here and there. You can learn more about the market stats in Jax here

Equity Partnering, Buying on seller finance where the seller financing but mortgage and down payment. You pay seller interest on financing down payment. Buying house and selling it to new owner while you become the note holder on the house.