What Is Your Version of "The Perfect Deal"?

Question

In being 23 and just jumping into my first deal in REI, I have been giving this a lot of thought: What is YOUR version of the "perfect deal?"

I am talking property, neighborhood, financing, Cash on Cash returns, cap rates--anything you want to plug into "perfect." Given the different backgrounds and performance objective of those of you I have met, this should make for an interesting topic.

My perfect deal is a duplex situated on a corner lot, where I can talk a private lender into 8% interest only for 12 months to finance. The cash on cash return would be somewhere in the 30-40% range, and I would be cash flowing somewhere in the ballpark of $1,000 a month. After the 12 months of seasoning, I would refinance with a bank (with no paperwork) at 5% on a 30-year note.

So, what's yours? Save the rude and barbed responses--just curious to see what everyone has to say.

Roy N. · Answer

A performing, A-class, 25 - 50 unit apartment building with a CAP of 9 - 12% acquired with 95 -100% Vendor carry at a rate of prime +1.5 (or less)

... you did say dream ... didn't you?  :-)

Pat L. · Answer

We do a lot of creative investments, but here one my wife is still shaking her head about :)

Bought a property @ a tax auction for $20k, sold it CFD to an investor for $38k but I lent them $7.5k to rehab. (I'm in it for $27.5). He was just going to rehab & flip but it became a rental.

The CFD then paid me $23k in interest over 4 years but they collected great rents. (Now I have $4.5k on the table)

Then the new Tax Assessment more than tripled taking a lot of their rental income. So they literally gave it back. This time it was 'sold' to another investor with $5k down. We now hold $51K @ 10.5%, 20 yr term.

Now that's a 'RE-annuity' & we have done a number of similar deals over the years.

Shane Johnson · Answer

maybe not the best, but if your up 700k+ and have a (now free and clear?) rental that takes in 2k a month, id say your doing fantastic.

David Krulac · Answer

@Pat L.

I don't have the best record, there are others who have done better deals than me.  thanks.

Pat L. · Answer

@David Krulac certainly has the best record ...

We have had some great experiences but this was our best....

My wife made me sell my tired old (free & clear) rental home.Reluctantly I did but insisted on holding the note.

They then completely rehabbed/rebuilt the home, increasing it by 1368 sq ft then added a 3.5 car coach house.

7 yrs of payments later they divorced & she put it on the mkt. After she dropped the list price by $10,000 twice, I offered her $40,000 for a Deed In Lieu of, & she jumped at it. We then discovered she also left all the high end appliances ??

& now it's back to being a (high end) rental :)

David Krulac · Answer

@Clay Manship

I'm not sure there is a perfect deal but I'll tell you some of me real sweet deals that I did:

1. First house I bought at a State Dept. oral auction.  The auction was lightly advertised, and had a sign on the property but it was a cul-de-sac with little traffic.  But the best part of the deal is that I got to live there for 6 months without paying any rent or mortgage and only paying about half the utilities.  Plus they took care of the lawn care also. (Chapter 3)  Also took in paying

2.  Bought a property worth $360,000 for $30,000 and the first tenant paid $2,050 in rent, now what was that return on investment? (Chapter 32)

3.  Bought a property for $4,500 worth $600,000, that 2 lawyers said "There's nothing you can do." (Chapter 72)

4.  Bought a house that the owner had bought 3 years earlier for $185,000. I paid $6,400, and sold without advertising, without listing, and without a sign to somebody who approached me out of the blue for $140,000 cash, no contingencies.

Dell Schlabach · Answer

I find a deal while I'm on vacation, someone else looks at the house for me. I send a text to my realtor from the beach, with offer amount. get email the next day that I have the house. House closes in 3 weeks, crew starts immediately 3 weeks later the house is on the market. I get a full price offer the first weekend, we close 4 weeks later and I make $27,000.

I would take 10 more I these this month.

Dawn Anastasi · Answer

I keep aiming for more buy and holds like the one I did last November.  $23,000 purchase price, $1600 rehab, and good tenants already in there.  $875/month.  I closed on November 27th and started collecting rent a few days later.  I would take 10 more of those any day!

Ace A. · Answer

@Clay Manship

Refiancne with no paperwork?

Shane Johnson · Answer

My dream deal is my second house. I hope i can do it 10 times over.

It was a HUD home, with first look initiative. Thankfully I was in a position to bid, so I put one in. 2 bids were 20k higher than mine, but backed out for personal reasons. 1 bid and maybe both were CASH too, i actually randomly met one of the bidders a few months later, and he told me he bid owner-occ, 101k cash. I put in an owner occ offer, conv loan, 5% down at $82k. 
	
	I tore up the cat pee carpet, painted everything on the main floor (ceiling to floor, minus window trim) and refinished the wood floors myself, staining them walnut, also took main bath to studs and back up (reused newer toilet and the original cast tub).
	
	1 year 2 months later, I have 3 comps that closed in the last 30 days for $141k, $143k, $145k. Ironically the 141k house is the nicest and largest sq ft.
	
	I got the paper work rolling on a HELOC today, hopeful the full appraisal comes in north of $135k, hoping for $140,000.
	
	If this happens, the house will have appreciated $50k+ in equity in 1 years time on paper. 
	
	I only have the 5% down, and about $3000-4000 cash out of pocket into rehab. So roughly $8000 overall, plus a majority portion of the PITI payments(minus monthly rent of $350) if you want to get technical. 
	
	It also has a full attic to I can finish into a master, and a full poured concrete basement I can finish as well, ultimately taking this house from a 1050 sq ft home, to near 2300 sq foot. 3/3 with bonus non-conforming bonus  in basement. (or 4/3 with escape window).
	
	PITI is currently $723 a month, and it should rent for $1100-1150 a month very quickly in current condition if I chose to. I currently occupy it myself, with a roommate for $350 a month.

What Is Your Version of "The Perfect Deal"?

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