First Investment Property

[Alex Martens]

Investment Info:

Other buy & hold investment.

Purchase price: $100,000
Cash invested: $25,000

This Investment property is a 1/4 acre lot with a small cafe of which I am leasing, as well as a house that needs significant rehab. Once rehabbed, it will be either a STR, LTR or office space. This property was a seller-finance deal.

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

I was interested in this deal mainly because of the A - class location, as well as a purchase price significantly below its assessed value and the fact that I could do seller finance. What was also attractive was that the real property and the business and its assets were included in the sale. Another attraction was the house that needs to be rehabbed as we see that as another source of future revenue.

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

My realtor knew the seller well and thought I would be a good fit to take over. The previous owner was going through life events that increased the need to sell dramatically. This of course was the negotiating power.

How did you finance this deal?

This was a seller finance deal. Purchase price of $100K (originally asking $249K) with $50K down (25 between my partner and I). The remaining $50K is financed at 5% amortized over 10 years with a balloon payment after 48 months.

How did you add value to the deal?

I added value by contributing half of the capital as well as finding and negotiating the term of the note.

What was the outcome?

The outcome is that it is now rented for $2,000 per month yielding a $740 net clash flow.

Lessons learned? Challenges?

Biggest lesson learned was to be extremely redundantly clear to the attorney what it is that needs to be done. There was a lot of back and forth due to lack of clarity.

[Joshua Janus]

That is awesome that you negotiated a seller financing deal, especially in this market! Congrats.