$0 Money Down First Investment Property (2020 Year End Update)

[Tae Sung Yoon]

Investment Info:

Small multi-family (2-4 units) buy & hold investment in Anchorage.

Purchase price: $547,500
Cash invested: $5,000

2020 Year End Update:
After closing on the property, I immediately rented out the vacant unit within 3 hours using Facebook. The next month, Unit 1 moved out of state & Unit 4 decided to move-in with increased rent. This gave me the opportunity to completely remodel Unit 4 increasing the rent. Months later, my best tenant had to move out. She was kind enough to give me 2 months of notice. It got rented quickly. All in all, I'm very fortunate to have increased the cash flow from $408 to $904 per month.

What made you interested in investing in this type of deal?

Financial Freedom. As a kid, I've always been a bit of an old soul worried about how to secure my future. Of course I've dabbled in stocks, retirement plans, & other investments but I feel that I've finally found my vehicle to ensure my future with real estate. Also it's very gratifying to know that I'm giving people a place to call home and getting rewarded for it in return. The cash flow, equity build, appreciation, and most importantly.. the tax benefits! One of the best decisions of my life~

How did you find this deal and how did you negotiate it?

I actually found out about this property when it went live on the MLS. I'm a licensed realtor in Alaska which helped me because I was checking the MLS everyday for a fourplex property. Once I found this property I immediately contacted the listing agent, received a current rent roll, requested a showing, called the utility companies to confirm expenses, analyzed the deal, & submitted my offer. Using strong comps, I was able to negotiate $27,500 below asking with $13,500 in closing costs!

How did you finance this deal?

Before financing this deal, I used a mortgage broker to shop around for the best rates & least amount of closing costs. After pending, I put down my initial $5,000 in earnest money. At closing, I used my 3% commission as my down payment since I represented myself as the realtor. From there, I received $3,650 in prorated rents and $3,900 in security deposits. I had closed at the beginning of Feb & filled a vacancy so I was able to collect 2 full months of rents before my first mortgage payment.

How did you add value to the deal?

I was able to create instant value by getting $13,500 of my closing costs paid for. This covered all of my prepaids, reserves, & I even had a little left over to go towards my equity. I was also very fortunate to have a such a generous seller who agreed to pay to replace & repair a good portion of the building. Also I made very good use of the two months without a mortgage payment by keeping the property completely occupied and then using those funds to completely remodel one of the units.

What was the outcome?

I'm extremely grateful to have purchased this building as my first investment. I truly feel that I was able to land this deal by studying everyday. If I hadn't educated myself, I wouldn't have moved forward on my offer with such confidence. I remained patient but always stayed ready to pull the trigger. The outcome was that I was able to purchase a building that initially provided $408 in cash flow and turned it into an investment that is now producing $904 with all expenses taken out.

Lessons learned? Challenges?

I learned that every transaction needs to be a win-win for both the buyer & seller. If you're going to request something, make sure you have a good reason for why you are requesting it. I was able to get most of my repair requests accepted by leaving out a lot of the smaller items to help save the seller money, time, & effort. I truly believe that made a huge difference when it came to negotiating repairs. As for pending an offer, always have a reason for your offer price.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Yes. I am a full-time realtor with Keller Williams Realty and I represented myself on this deal. I primarily specialize in multi family investment properties but I also work with residential & commercial. My goal is to help other people like me to use real estate as a vehicle for financial freedom. If you're interested in investing, selling, or 1031 exchanging in the Anchorage market, then feel free to contact me. I wish you all good health & good fortune in 2021! Happy New Year! 🥳🍾🎉🎊🎈