Land Contract and Cash Our Refinance

[Stewart Beal]

The power of the land contract and the cash out refinance: In 2014 I was driving down Ecorse in Ypsilanti, MI and came upon a hand written for sale sign in front of 317 Ecorse a 14 office suite building, 9,659 SF built in 1971. The building appeared vacant and I called the number on the sign and spoke to he owner. He told me he was 80 years old and in a terrible predicament. He recently lost all of his tenants at once because the FBI raided them relating to medicare fraud and writing excessive prescriptions for oxi. He told me he urgently needed to sell the building. I offered him $185,000 on a land contract where I would put $20,000 down, and borrow $165,000 from him for 3 years at an interest rate of 5% and with payments of $1,088.93 per month. He agreed and I took possession of the building and got to work making the suites more desirable and closer to move in ready. We branded the complex The Ypsilanti Towne Center and rented to a janitorial company, a construction company, a church, a hair salon, a medical RNA/CNA training company. In the following months I invested about $50,000 into the property as we leased up spaces, basically assisting them with tenant move in improvements. After about 9 months we were 100% occupied and cash flowing really well. After 3 years, in 2017, we refinanced with a local bank to pay off the land contract and remained 100% occupied. This month as the prepayment penalty on the loan we took out in 2017 rolled off we decided to go for a big refinance. Today we just got the appraisal and I was very pleased to see the building we bought for $185,000 with $20,000 down in 2014 is worth $650,000 today!

Please note that I have partners in this deal that contributed to its success.