My BEST DEAL in 2017

My BEST DEAL in 2017

Shiloh LundahlPro Member
Rental Property Investor · Gilbert, AZ · Member since 2016 · 3k+ posts · 4k+ votes

We have accomplished a lot in 2017 which I will be recapping in a week or two entitled 11 BRRRRs in 2017.

As for right now, I wanted to share my favorite deal of 2017.

My partner saw a property come up on the software that his brother made to analyze the MLS and notify us of potential deals in Arizona. This property was a manufactured home on an acre-and-a-quarter out in Apache Junction. It was listed for 160k. The ARV was about 180k - 190k. That doesn't seem very exciting, however, it was being sold with the acre-and-a-quarter lot next to it that had 2 dilapidated houses on it.

When we called to put in an offer, we found out that the property had a few offers already.  So, even though my partner is an agent, we asked the seller's agent to represent us and to put in a competitive offer for us.  He wrote up the contract for 170k which got accepted by the seller.  During our inspection, we found out that the plumbing was bad on one of the dilapidated houses so we renegotiated back to 160k and the seller accepted.  

Here are pictures of the manufactured home and dilapidated houses.

We have a good relationship with hard money lenders in Arizona and one of them gave us the 160k for the purchase.  We then partnered with another investor who came in with 10k for the repairs on the manufactured home (roof repair, skirting, adding a fence, and a few more miscellaneous items).  

We then leased out the manufactured home on a lease option for 195k with a 5 year option a week after we closed on the purchase. We then listed the other parcel on the MLS. Within a few days we had multiple offers on that parcel and we closed on it a few weeks later for 105k. After closing costs we applied around 96k to the hard money loan.

Now we have a hard money loan of 64k on a property that we have leased out with an option to buy at 195k. We are currently working with a bank to get a loan on the manufactured home.  They want my 2017 taxes to close the loan, so it looks like we will be in hard money until March or April.

Here are the numbers

Purchase price (from hard money lender) 160k

Closing costs (paid by me) 2,409.22

Repairs (paid by investor) 9,634.23

Option fee received from new tenant 5k

Sale of other parcel 105k (96,201.04 after closing costs) applied to hard money loan.

New loan from hard money lender 64k

Our total into the property 5,000 (option fee) - 2,409.22 (closing fees) = 2,590.78 cash back

If we don't get the loan on the property then we will pay off the investor 10,790.33 at the year mark.

Cash flow is 438 (219 each)

Our total profit over the next five years on this property if the tenant exercises the option at the 5 year mark will be 142,900 (71,450 each). It will be less if they exercise the option early.  It may be more if they don't exercise it and we hold the property longer.

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Rental Property Investor · Fort Wayne, IN · Member since 2016 · 258 posts · 177 votes
8y

@Shiloh Lundahl Congrats and thanks for sharing you story but look at my best deal.

My best deal in 2017 was a house bought at an auction for $23000 and spent about $2000 on fixing the plumbing under the house and rented it for $760.00 a month and after 3 months appraised for $46000 and used that house as downpayment and bought six more SFRs with no more money out of my pockets and bringing in a rent of $3100 a month.So basically with out of pocket $25000 bring in a rent of $3860 per month.

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  • Brie SchmidtBusiness Member
    Moderator
    Real Estate Broker · Chicago, IL · Member since 2013 · 6k+ posts · 5k+ votes
    8y

    Awesome!  Congrats!

  • Rod HanksBusiness Member
    Insurance Agent · Dallas, TX · Member since 2013 · 743 posts · 462 votes
    8y
    Congrats!!!
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  • Shiloh LundahlPro Member
    OP
    Rental Property Investor · Gilbert, AZ · Member since 2016 · 3k+ posts · 4k+ votes
    8y

    @Brie Schmidt thanks for your comments..

  • Brie SchmidtBusiness Member
    Moderator
    Real Estate Broker · Chicago, IL · Member since 2013 · 6k+ posts · 5k+ votes
    8y

    you got a sweet deal on that other lot

  • Shiloh LundahlPro Member
    OP
    Rental Property Investor · Gilbert, AZ · Member since 2016 · 3k+ posts · 4k+ votes
    8y

    @Brie Schmidt We did get an awesome deal on that other lot. When we looked at the property, I knew that it had great potential that many investors may not have noticed, but I didn't think that it had that much potential. Originally I thought that we could send out that second lot to other investors and possibly get 40 or 50k for it. But my business partner said that we should put it up on the MLS instead and that we should list it for 99k. I am glad we did. It made us an extra 25k each that we otherwise wouldn't have made.

  • Shiloh LundahlPro Member
    OP
    Rental Property Investor · Gilbert, AZ · Member since 2016 · 3k+ posts · 4k+ votes
    8y

    I was just running the numbers to see what the profits would be if we did a cash out refinance and got a loan for 110k, pulled out 35k in profit, and paid off the investor. We would each make around 78k on the investment over the next 5 years. If we were to just get the loan for 75k and pay off the hard money lender and the investor but not take the money out, then we would each profit $82,600 each. The deal just gets sweeter. However, I think I would rather take out the 35k ($17,500) each. It would be tax free (or tax deferred until we sell the property) unless we did a 1031 exchange into another property when the tenant exercises the option. And then potentially we may be able to defer the taxes indefinitely.  I think I would like to get the $17,500 now because I could potentially put that into another deal and pick up another property.

  • Real Estate Broker · Westminster, MD · Member since 2017 · 159 posts · 101 votes
    8y

    Home Run! People often overlook the larger lots with multiple dwellings and the multi lot offerings. 

  • Shiloh LundahlPro Member
    OP
    Rental Property Investor · Gilbert, AZ · Member since 2016 · 3k+ posts · 4k+ votes
    8y

    Thanks for your comment @Jimmy Dudley. I agree. I think a lot of investors overlook properties because they don’t see the potential of what the property could be or could do.  I was unsure about doing this property because it was a manufactured home and I knew that it would be harder to get it refinanced. But I am really glad that we decided to do it.

  • Toronto, Ontario · Member since 2014 · 615 posts · 172 votes
    8y

    @Shiloh Lundahl

    Splendid! This indeed should the deal of the year!

    Congratulations..

  • Shiloh LundahlPro Member
    OP
    Rental Property Investor · Gilbert, AZ · Member since 2016 · 3k+ posts · 4k+ votes
    8y

    Thanks @Ndy Onyido. This was a deal of the year!  We did a couple more similar to this one but this one was one of the more creative ones so I wanted to highlight this one.

  • Investor / Vendor · San Diego, CA · Member since 2016 · 1k+ posts · 949 votes
    8y

    @Shiloh Lundahl

    Nice deal making and very sexy numbers on the deal :) Love the creativity and using the good ol' double-dip trick to make the seller's agent work for you.

  • Shiloh LundahlPro Member
    OP
    Rental Property Investor · Gilbert, AZ · Member since 2016 · 3k+ posts · 4k+ votes
    8y

    @Ray Lai thanks for the reply. I have used the seller’s realtor 4 times in the last 12 months and have had good success with getting properties that way.

  • Residential Real Estate Broker · Schaumburg, IL · Member since 2015 · 28 posts · 8 votes
    8y

    Awesome Shiloh! Looking forward to read the full story for 2017 =)

  • Rental Property Investor · LA · Member since 2014 · 16 posts · 6 votes
    8y
    Congratulations!
  • Investor · Arlington, VA · Member since 2012 · 1k+ posts · 491 votes
    8y

    Congrats!  Thanks for sharing this awesome story!

  • Rental Property Investor · Jacksonville, FL · Member since 2013 · 2 posts · 4 votes
    8y
    Wow! Awesome with the creative financing methods used for this deal! It shows there is always more than one way to make an investment work and many ways to create a profitable scenario. Great job!
  • Rental Property Investor · Fort Wayne, IN · Member since 2016 · 258 posts · 177 votes
    8y

    @Shiloh Lundahl Congrats and thanks for sharing you story but look at my best deal.

    My best deal in 2017 was a house bought at an auction for $23000 and spent about $2000 on fixing the plumbing under the house and rented it for $760.00 a month and after 3 months appraised for $46000 and used that house as downpayment and bought six more SFRs with no more money out of my pockets and bringing in a rent of $3100 a month.So basically with out of pocket $25000 bring in a rent of $3860 per month.

  • Real Estate Investor · Austin, TX · Member since 2016 · 24 posts · 6 votes
    8y

    Why don't you just do your taxes on Jan 1? Have everything up to date on Dec 31 and tee'd up to file and then provide the bank with your pro-forma taxes.

  • Real Estate Agent · Tampa, FL · Member since 2015 · 1 post · 1 vote
    8y

    What software did you use? Is that commercially available or proprietary?

  • Ashburn, VA · Member since 2017 · 1 post · 0 votes
    8y

    I enjoyed reading that. Well done! 

  • Investor · Melbourne, Victoria · Member since 2017 · 25 posts · 13 votes
    8y

    Congratulations! Thanks for sharing your story

  • Shiloh LundahlPro Member
    OP
    Rental Property Investor · Gilbert, AZ · Member since 2016 · 3k+ posts · 4k+ votes
    8y

    Thanks @Gerardo Lozano, @Paul Dillon, and @Frankie Woods for your words of encouragement. I look forward to sharing the rest of the story for 2017 in a few weeks.

  • Shiloh LundahlPro Member
    OP
    Rental Property Investor · Gilbert, AZ · Member since 2016 · 3k+ posts · 4k+ votes
    8y

    @Kay Kay Singh Awesome success story. What a great way to generate almost 4k in cash flow a month. Thanks for sharing.

  • Shiloh LundahlPro Member
    OP
    Rental Property Investor · Gilbert, AZ · Member since 2016 · 3k+ posts · 4k+ votes
    8y

    @Chris Ruoff I am working on getting my financials to the bank as soon as possible to see about getting a loan on that property. We have been working on our accounting for the past few months trying to get it ready for the end of the year.

  • Real Estate Investor · Austin, TX · Member since 2016 · 24 posts · 6 votes
    8y

    @Shiloh Lundahl Awesome. I wasn't sure if you are w2 or what but I thought I would throw it out there. Good luck!

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