7% Return / 24 month CD

[DJ Carroll]

Hey Guys, 

New to the forum, been messing around in Real Estate for about 3 years though. I'm ready to take it to the next level and get in on the multi family game. I always try to put as little cash down on a deal as possible and in thinking this way I have come up with a strategy that I would love some input on. Let me know if you think this would work or if it's complete craziness. 

We would secure an investor to put up 20% of the purchase price (the down payment) but instead of taking that "cash" to closing along with the 80% from the bank - I have worked out a deal with my bank to put that 20% into a CD and the bank would then loan the full amount and put a lien on the CD. The CD would be 24 months and earn right at 1%. My company would pay an additional 6-8& (depending on the $$ invested.) 

The return would be paid out Quarterly and at the end of the 24 months we would refi the property, the CD would be released, and I would have a multi unit property for $0 down. 

Example: $270,000 deal I'm looking at. Find someone to invest 54k with me, give them 7% APR. That would get them a $945 check every 3 months for 2 years. Then they would get all of their 54k back.

I have formulas I run the properties through to analyze the cash flow and if the deal would work or not. I figure if I find one that works - we open a round of funding. I think this could really take off. 

I'll give you guys any more details you need or answer any questions. I figured I would bring this to the experts to see if you guys though it was feasible! 

Thanks everyone! 

-DJ