All Forum Posts by: Daniel Cisneros

@Daniel Cisneros, I did another deal like this about a year after this post.  I bought a beautiful massive 4 plex.  Long story short while waiting in line I talked to a guy who ju8st inherited his dads 4 plex.  He along with 2 siblings were losing money each month and it had no mortgage!  I eventually bought it with them financing $45K at 4% interest, with monthly interest only payments of $150 per month with a 5 year balloon.  The bank carried the rest and they got a nice big cash payment for the rest up front.  I calculated the cash return exactly as I would any other house, but included the interest only payments.  At the last minute I got cold feet and did a 20 year mortgage, not a 15, so I had to make a backup plan to pay the $45K as the mortgage would not be small enough to pay off with a refi if there was no increase in value.  I paid that note off this year and actually lowered the payment as I got a 30 year loan at 4.25%.  I have actually never had a 30 year loan on a property, it is disconcerting.  Anyway, the property only had marginal cash flow, but I literally got it for only a few hundred bucks out of pocket.  Other than a new roof that was 50 squares it has been very low maintenance, so while cash low is low, cash on cash looks impressive.  Even at only $75 per month after expenses, it has vacancy, cap ex, and repair expenses included.  At the end of 5 years cash flow is now up $200 per month and appreciation almost $100K.  It has probably appreciated more than any other property.  My experience is that nicer properties cash flow much less, but appreciate more.  It is a balancing act to add a few of those in.  I try to do at least one every year or 2 if I can afford it.

@Daniel Cisneros unfortunately nothing sexy to share lol. Everything I have done since that post has either been true seller financing where they are pretty flexible where I get the down payment from, or bank/conventional/hard money. I have yet to find a source that allows for a higher combined LTV with the seller carrying a 2nd where the rate/terms actually make sense to take that on. I am sure there are some commercial outlets that allow it for some of the higher price points, but at least in the sub <$1M range I have not found a ton of luck. I will say there is a way where you can do some stuff with personal property depending on what you are purchasing. For example, if the real and personal property combined is worth $1M, you might be able to purchase the real conventionally at $800K and have the seller carry 100% of the personal property. Just one thing I have learned throughout all of this :)

Good god this was 6yrs ago I posted this, since then I have learned and accomplished so much in real estate. Creative financing is single handedly the key to getting in to deals with little cash out of pocket. 

My structures are simple these days 30% down payment at 5% to 8% interest over 30yrs due in 5yrs

 Of that 30% down payment I'll pay 5% and the seller carrys a 25% second loan(I try to get a non secured 2nd and defer it out to be due at the 5yr payoff, but most sellers are smart enough to want it secured & usually go with a 6 month deferment.)

basic you have 1st loan and a second loan to factor in your calculation.

Simple Formula example;

Total Rent - 1st loan - 2nd loan - insurance - taxes - property management fee - any other expenses that apply to your situation = free cash flow. 

PM me if you have any questions.