Investment Info:

Duplex buy-and-hold investment.

Purchase price: $130,000
Cash invested: $0

Acquired from a motivated investor moving out of state in late 2022, this duplex was turnkey upon closing. The previous owner was starting a new business and was ready to be done with real estate. We negotiated a 75% bank finance, 25% seller finance deal that required no money down at closing and no work needed, given it was turnkey. The total monthly PITI, including seller finance, is $1,200 a month. Both sides rent equal $1,600. After maintenance and property management, it cash flows ~$200 a month.

Being the property manager on the backend does have its perks. The tenants have never missed a payment, but being on time has been another situation. Last year, the property averaged nearly $2,000 a month in rent when you include late fees. We have an aggressive $50 a day charge beyond the 3-day grace period. The late fees are not something to rely on by any means, but they increased the property performance in 2023.

The market value is $160,000.

What made you interested in investing in this type of deal?

My current specialty is residential investing and managing the properties on the backend. Given this was a duplex in a developing area, my strategy was to buy and hold with cash flow. The fact that I could hit every box with $0 down and still have a good margin of safety made me jump all over it.

How did you find this deal, and how did you negotiate it?

This property was found on Zillow FSBO. He wanted the cash pop to help with his new business but liked the idea of monthly cash on the backend.

How did you finance this deal?

The bank loaned 75% on a 30-year fixed loan with a 15-year balloon. The remaining 25% was seller-financed on a 4% interest-only loan, ballooning at 10 years.

What was the outcome?

We now own a highly desirable duplex with instant equity, cash flow, and no money invested.