All Forum Posts by: Jerry Zhang

Hi,

I'm wondering what the official term for this type of deal. Say we buy a property for $1 million, but we structure it so it's 0% down but a bank/note buyer is in place at closing to buy the note from the seller at 80% value so they walk away with 800k in cash. 

What's the official term for this kind of deal? 

Hi,

If I buy a apartment doing a seller carry back, how do I explain to the seller how they are protected if they carry a 2nd position note subordinate to the bank?

The example scenario would be if I bought a $1M property, the bank is in first position and covers 800k of the property cost, the seller agrees to cover cost of down payment and covers 200k of the property cost.

Let's say we can no longer make payments on the property and it's foreclosed on. How do you guarantee the original seller that they will also get back most if not all their money. What guarantees they'll be made whole in simple terms? 

I'm wondering if there is a market or demand for wholesaling seller carryback deals for mobile home parks. With seller carry backs you can get the seller to take a 2nd mortgage and carry most if not the entire down payment. I was wondering if it's possible to wholesale seller carryback deals to buyers. The benefit to the seller is that they get 0% down deals with lower than average interest rates for commercial deals (Seller carrying 25-50% note at negotiated 0% interest) and have theoretically infinite returns with 0% down. The biggest challenge I can see for this is that I hear it's a pain in the *** for the seller to go through a local community bank and confirm their income for their approval for a mortgage, and there are local/community banks that will approve 95-100% LTV loans based on how profitable the deal is. These deals are much easier to get locked down and offer more options for disposition strategy, but would rely on a qualified buyer pool who would be earning more than the six figures through w2 or a business.

Benefits:

- No Down payment deals

- Seller carries 25-50% of purchase price

- Lower interest rate than banks. (if seller carries 50% note at 0% interest, bank interest rate is 6%, combined interest rate is 3%)

- Infinite returns with 0% money down

Cons:

- Not a very easy deal to complete as seller financing ones

- Have to find qualified buyers with good w2 or business income already

- Seller would have to work with community bank to get deals done

Any thoughts on the viability of this strategy for wholesaling mobile home parks? This way I can present 3 offers to sellers with cash, 10% down seller financing, and the seller carryback (50-75% down). Unless most deals with seller financing already carry the down payment by default. Doing a deal like this makes sense to myself as an investor if I were to do it with 0% of my own money down and if it was structured and laid out for me. I think the biggest challenge for this strategy to work is to build a qualified buyers list that is making over six figures that are likely to qualify for community bank mortgages with their income. Who wouldn't want to have theoretically infinite returns with 0% down payment, low interest rates, and have the deal structured for them in real estate as long as they earn 100k+ a year for most deals in the 250k-1M dollar range?

@Gino barbara

average household income is $31,000 USD, Unit mix is 8 1 bed/1 bath, 2 2 bed/1 bath, 1 4 bed 1 bath mobile home. Wasn't able to get the leases for the units. This was actually a on market deal that just closed yesterday. I thought price per unit was very good and talked to a local realtor in Las Cruces where units are $70-100k a pop. 

At the end of the day, I asked myself would I spend $500k on this deal. The answer was probably not with these returns unless I'm a local investor. If I had 500k cash I would do a 10% owner finance deal and ROIC would be better.

@Justin Moy

Hey Justin, 

Your right COC is 7% I must have mistyped there, property was built in 1956 interior is in good condition. I just found out the deal closed yesterday, but happy to shoot you over the numbers to take a look at the deal

Hi, I came across an interesting multifamily deal for all cash.

It's a 11 unit multifamily apartment in new Mexico. Current NOI is $37,000 with 9 out of 11 units rented. Proforma NOI is $64,000. Seller looking for $500k cash for this deal at 45k per door. Very light repairs needed and turnkey property. Cash on cash returns of 33.74%, buying at a 7.42% cap rate, Proforma cap rate is 12.82%. Goal is to wholesale this one.

I'm familiar with analyzing deals with seller financing where a good deal would be 3-5x ROIC, but I'm not as familiar with analyzing for cash deals, could I get some feedback for this one? Thank You

Hi Everyone

My Name is Jerry and this is my first post here on Bigger Pockets. I’m excited to dive deeper into the multifamily real estate world and would love to connect with like-minded individuals. I’m looking to expand my knowledge and network with BP members that are in the multi-family space.

If you have experience in multifamily deals or are interested in partnering on future projects, I’d love to hear from you. Let’s share insights, learn from each other, and explore opportunities together!

Looking forward to connecting!