Need some help with financing and navigating my first deal

[Aaron Kim]

I have been interested in real estate my whole life, but was always too scared to start my own journey.

Last week I came to realize that the shift in the market with the interest rates going up may be the perfect time for me.

I have been listening to 2-3 podcasts a day and I really enjoyed the episode with Pace Morby, who used creative financing to get 300 doors.

Since then I started to contact some agents in Las Vegas and they sent me a couple interesting deals that caught my attention.

I found a 9 unit that's only collecting $3,500 in rent with one vacant unit and one unit used by the property manager.

Projected Market rent in the area is around $9,000 for the 9 units with a mix of 1 bed 1 bath and 2 bed 1 baths.

with the Projected market rent the deal would be well within the 1% rule for income properties.

I already asked if the seller is interested in seller financing, but she is not open to the idea.

What is the best way to reach out to the seller to discuss if seller financing is beneficial for her or not?

Also my main problem with investing at the moment is that I do not have a regular job, and my credit score is in the mid 500's.

I have a couple friends that I can bring into the deal that have good credit with high paying jobs.

What's the best course of action here? would really appreciate any input and help for new investor just starting out.

I understand that I can start with cheaper investments, but I think if the numbers make sense I can really make this deal happen.

Thanks in advance!

[Chris Mason]

Quote from @Aaron Kim:

I have been interested in real estate my whole life, but was always too scared to start my own journey.

Last week I came to realize that the shift in the market with the interest rates going up may be the perfect time for me.

I have been listening to 2-3 podcasts a day and I really enjoyed the episode with Pace Morby, who used creative financing to get 300 doors.

Since then I started to contact some agents in Las Vegas and they sent me a couple interesting deals that caught my attention.

I found a 9 unit that's only collecting $3,500 in rent with one vacant unit and one unit used by the property manager.

Projected Market rent in the area is around $9,000 for the 9 units with a mix of 1 bed 1 bath and 2 bed 1 baths.

with the Projected market rent the deal would be well within the 1% rule for income properties.

I already asked if the seller is interested in seller financing, but she is not open to the idea.

What is the best way to reach out to the seller to discuss if seller financing is beneficial for her or not?

Also my main problem with investing at the moment is that I do not have a regular job, and my credit score is in the mid 500's.

I have a couple friends that I can bring into the deal that have good credit with high paying jobs.

What's the best course of action here? would really appreciate any input and help for new investor just starting out.

I understand that I can start with cheaper investments, but I think if the numbers make sense I can really make this deal happen.

Thanks in advance!

 The seller, if they're a match for what you are looking for (& they may not be), wants regular passive no-hassle monthly income. And that amount can be less than what they or you "could" get from fixing up that property and turning it over, and we know that's true, because if they were interested in doing that work for the largest monthly income, they'd have already done it. They didn't do that work, they don't want to do work (that's the One Big Thing that jumped out at me from your post, and what the rest of this basically feeds into), they just want to cash a check every month. That's where you come in. You're going to make this easy on them, the most hassle free decision or thing they've ever done, certainly easier than dealing with placing tenants and fixing a broken oven!

So, you're going to offer them what they want. You're going to do the work, to make it easy for them (recurring theme alert!). You're going to pick some number greater than what they're currently getting from the property, but less than what you expect you will be getting (factoring in of course risk, effort, expenses, and so on), and you're going to take out a financial calculator (I'm fond of the HP-12C) to turn that into a menu of terms, fees, and interest rates. And just like any good restaurant, you're going to do the work up front, to promulgate a menu that makes it easy for the customer to shop between options, all of which look excellent (don't put stupid overpriced low quality things on your menu), without having any menu items that don't also work for you as the restaurant. 30 year term at this rate, 25 at that one, maybe some with higher upfront fees and others with lower, and so on, we have a wide variety of excellent wines, you could also present that entire menu, but advise on which 2 or 3 might be the most appealing to go with their steak (we took something confusing, and did the work to make it easy). But the entire menu needs to be things that work well for you and your goals, while also looking appealing to your restaurant's 'customer.' 

The fact that the monthly check you write is less than the monthly checks you deposit, in exchange for you doing some "work," is where you stand to make a profit. Arbitrage. 

Amazon dot com does not care what I buy on amazon dot com, they care that I'm buying it on amazon dot com. Go be amazon. Give them their menu. Insert some random 3rd metaphor here.

Good luck. 

BTW: realtors do not like seller financing because it often winds up translating into them not getting paid at the closing table. Set aside 6% to address that.