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Updated almost 9 years ago, 01/02/2016
My Third Deal, Another 4 Plex
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)
Originally posted by @Andrew LeBaron:
Muy bien amigo!
How close is it to UOFA campus! ?
It's probably 1.5 miles from U of A, but the tenants aren't college students, but lower income working class. It is near I-10 and Speedway, if you know the area.
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.
Awesome! Great job, and it'll be nice to have two so close together!
Originally posted by @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.
You're a true inspiration Anthony, congrats. I love seeing it CAN be and IS being done in Tucson, I hope everything goes well. Get's me fired up!
@Justin Ellis Thanks, it can be done anywhere. I am already making plans for my fourth property.
Very nice.
And the renters buy the property for you.
Originally posted by @Kelly N.:
Awesome! Great job, and it'll be nice to have two so close together!
That is exactly what I was thinking. It will make management so much easier. There are other small multi-family properties in the same neighborhood and in the future I may look at acquiring those as well.
Momentum is a beautiful thing! Congrats, Anthony, and hope it's continuing to go well!
That's great @Anthony Gayden! We are under contract on #4 and #5, and they are next door to each other as well. Our first one is about a block away and the other two are a few blocks away and close enough together that I can show people apartments at both if I have similar units coming up. I love being able to drive by everything within a few minutes!
This is awesome Anthony. I was wondering what the plan is in 5 years when the balloon hits? My understanding is it would be refinanced with a traditional lender? If that is the case have you heard if there is a limit to how many investment properties you can have? Is it a concern that when the balloon hits you wont be able to pay the seller in full? I am EXTREMELY curious about this because I would love to utilize this tool of seller financing. I am currently attempting to buy a foreclosure in Vail for a live in flip with a VA loan. Most likely stay there 2 years to avoid capital gains and attempt to sell it for a profit. I did work the numbers so I would be able to cashflow it a little bit in the event that I dont sell it for a profit. Again, Congrats! Your story truly is an inspiration. You are following the path I want to go down!
What a great success story! Congratulations on your new property.
Unfortunately, this deal fell apart due to me moving across the country.
https://www.biggerpockets.com/forums/48/topics/222507-third-deal-falls-apart
Congrats! Sounds like you are doing everything right! Slowly building up your empire.
Thanks for sharing with us all!
(I lived in Tucson for a bit and know the area. Nice job!)
-JIll
- Rental Property Investor
- Indianapolis, IN
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@Anthony Gaydenthanks for keeping us updated and sorry to hear about the third deal falling apart. Sounds like no deal is better than a bad deal since you needed the cash.
You mentioned you owner-occupied one of your existing 4 plexes.
Can you tell us more about how you handled landlord duties and being the owner while living with your tenants?