$474,725.00 Wealthier Today...

[Austin Fruechting]

You make your money when you buy! I'm closing on a 22 unit portfolio that consists of 12 single family homes and 5 duplexes. The sellers first offer for the package deal was $1,140,000. Through a LOT of strategic communications and negotiations, I eventually got them to accept a price of $790,000. 

The appraisals came in at $1,264,725... $474,725 above the sales price! So just by closing on this deal my net worth goes up by nearly 1/2 a million bucks. 

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But this gets even better... 

Since I bought so well my bank only required 10% down of everything including closing costs. I sold a 6-unit building which net just enough to 1031 for the down payment on this portfolio. So there will be no money out of my pocket to purchase the portfolio. 

There's a value add play too. The properties need approximately $200k in work and I wrote the contract for $890k with a $100k credit at closing. My bank will escrow that $100k for me to draw on as work is completed. 

I will only have to come up with the ~$100k to finish out the work. I'll do some of it cash and I'll pull some short term debt at the end. Then when the work is complete (6-8 months) I predict the value to be ~1.55 million. At that point I'll refinance at 70% LTV which will put ~$300k back in my pocket and cash flow ~$3k per month (my 6-unit was about $1k per month)

SO +1/2 Million net worth... with no money out of pocket to buy... AND half the rehab costs are covered... 

THEN at refinance +$200k cash in my pocket from before the deal... AND +$2k more in cash flow