Success story: Infinite return

[Cody L.]

So I've always tried to avoid these types of posts as I don't want to come on here to beat my chest.  Instead, I lurk around and comment if I see a question I can help with.  However, the posts I read that are the most encouraging are the ones where someone has success with a property and it motivates others.  I love seeing those.   So I wanted to share one in case it helps someone on the fence about getting started.

Going to try to give the super quick story:  There was a great property in downtown Houston.  I wanted to buy it for a while but the owner wanted too much.  He lowered the price a few times till someone else put it under contract.  I told him I'd send the title company a huge wire of non refundable EM if he let me be a backup at my price in case his buyer flaked.  He said okay, buyer flaked, and I ended up with the property.  3 months ago today actually.

The property was in bad shape.   Mostly vacant.  But A+ spot and a good price.  We quickly did a light make ready to 1/2 the units and put in some renters.  The other units we gutted to studs and totally remodeled and leased out for a higher market rate.  3 weeks ago I started the process to refi (I paid cash.  Yes, that's "cheating" in a way and not something everyone can replicate but I can comment more later).  I got the appraisal back and we're funding on Friday.

I'd like to use rough numbers as I'm somewhat private.   Purchase price was about $2.2m, about $300k put into the property, with about $300k left after the other half of units are upgraded over time.  So I'm in for $2.5m now with $300k of capital left to put in.  The property appraised for $3.7m.  Bank is doing a 80% loan.  Call it $2.9m loan after all fees.  That means all the cash I put down, all the cash I spent to fix up, and all the cash I'll need for future upgrades has been provided by the bank.  Plus another $100k in my pocket.

Infinite returns (+$100k)

Loan will be about $17k/month, which means it should throw off about $2k before I upgrade those last units and about $5k+ after.  That's "free" income as no $ out of pocket after the loan funds.  And I get that income while living OOS in San Diego. 

A few 'catches'. Again, I paid cash for this deal which helped me get it. Though I have the relationships to have bought it via F&F / HML. It would have just cost more. Not so much in rate, as I refi'd after 3 months, but in up front points. And this isn't going to be a first timer deal for most (though it could be if you had financing connections). But it's for sure something that's possible after you've been doing this for a while. I've been doing this for about 10 years ago. My first deals were not as good. Financing was hard and I had little funds for down payments if I could get a loan.

But for you:  If you just get started, you'll get there.  If you're on the fence, get off it and take those first steps.  Yes its scary but there is a snowball effect that starts that'll have you setup for life.