My Third Deal, Another 4 Plex

[Anthony Gayden]

Hello Bigger Pockets members. I am just sharing information about my potential third deal. The property is a 4 unit located in Tucson, Arizona. 

A little background first. Last year I bought my first two properties, a 4 plex in Phoenix, AZ which I bought with a conventional mortgage and 25% down payment, and a 4 plex in Tucson, AZ which I bought with an FHA loan and 3.5% down payment and owner occupy. The person that I bought the 4 plex in Tucson from actually owns another identical 4 unit property right next to the one he sold me.

So every once in a while I would see the guy as he fixed things and collected rents from his tenants. He often expressed how he was sick of being a landlord and was ready to sell the other property as well. Anyway fast forward to today and I tell him that I want to buy the other property from him. He agreed to owner finance the property with 20% down, 5.5% interest with 30 year amortization, and a 5 year balloon. Since I already own the property right next door, I know the price and cash flow are good, even though I will be paying a little bit more than I paid for the one I purchased last year. Also I am able to get around all of the bank's mortgage rules by owner financing and get into my third property a whole lot sooner than expected. 

Purchase Price $170,000

Down Payment $34,000

Interest Rate 5.5%

4 units, built in 1986, 800 square feet per unit, 100% occupied, Class C

Tucson, Arizona

Monthly Rent $2400 ($600 per unit)

Tenants Pay All Utilities

Property Management 7.5%, $180/month

Insurance $800/year (based on what I pay)

Taxes $1200/yr (based on what I pay)

[Anthony Gayden]

Ok an update. I got the property under contract with $1000 earnest money last week. I just scheduled the inspection for early August with a close date of September 1st. 

I'm getting excited. At that point I will have 3 properties, 12 units, $81,600/yr in gross income with the properties valued at around $510,000. All in my first 1.5 years. I set a goal when I started to buy $1 million in investment real estate in 5 years and I am half way there.