Triple Net Deals in SFR's

[Buddy Holmes]

I am new to BP and listening to the podcast from the very beginning. I posted this idea under the wrong topic previously and thought I would try again under this forum. I had just finished with podcast show 004 with @Frank Gallinelli. His discussion of Triple Net commercial property came from a different perspective than my earlier understanding of CVS, Walgreens, etc. I suddenly realized that a good deal my RE Broker came to me last summer with, is in fact a Triple Net SFR Investment! Has anyone else had one of these? The back ground is that my RE Broker is the host a local RE radio show. A couple came to him with their problem of having a short sale on their credit report. They had found a FSBO property with some acreage (they had horses) and asked him how they they could buy it.

He put them in touch with his (now mine as well) mortgage broker to discuss. Both these RE and Mortgage Brokers are "out side the box" thinkers. The Mortgage Broker told the couple that they were financially set to buy the new property but they needed to wait three years for their credit to clear before they could qualify for a loan. However, once they were clear they could get a great deal on Department of Agriculture Loan or a FHA loan with as little as 3.5% down on this property.

With the family's approval, the two brokers got together and came up with what is in fact a NNN Investment deal on a 5 acre horse farm and home.

The deal was offered to me. After some back and forth negotiations once the first sales price set,

the following terms were agreed to:

I would buy the property on a 20% DP conventional mortgage (My RE and $ Brokers both win)

The future Owners place a nearly 20% cash deposit on a signed Sales Agreement to buy the property in 36-48 months for a price that allowed some modest appreciation and escalates a bit after the 36th month for incentive to close.

The family signs an Occupancy Contract (not a lease or rental agreement) which sets the monthly fee (rent) to be $150 over the cost of Mortgage, Taxes and Insurance. In addition the contract specifies that they are responsible for all maintenance and repairs and compliance with local regulations. They are able to add improvements (it needed a horse corral (yard) with fence, etc as long as they did not involve anything with might lower property value. Nearly through the first year and the deal is working like clock work.

I see this a Win-Win for all involved. The family got a beautiful brick completely new rehab (roof, HVAC, flooring, cabinets, baths, kitchen, appliances.. as well as their horse farm in a quiet setting. I am getting a good CAP and will get a good ROI in another couple of years. My two brokers got their fees.

Any one else have experience in this type of an Investment?

Cheers, Buddy