Out-of-State Partnership for Beaumont Rental

[Katherine Wegner]

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $180,000
Cash invested: $14,000

We partnered with two Texas investors to purchase this 4-plex and single-family home using seller-financing.

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

We found this deal through a Texas investor who was wholesaling the two properties. She reached out to see if we'd like to purchase them. As we live in Southern California we decided to partner with her and another Texas investor. They negotiated with the seller who was open to seller financing over 5 years.

How did you finance this deal?

The owner agreed to act as the bank by providing seller financing over 5 years with a $45,000 down payment and monthly payment of $1012.

How did you add value to the deal?

We use a property management company and have been doing quarterly repairs. The 4-plex needs foundation repair, we are looking into re-financing in order to pay for that as our reserves don't cover that yet.

What was the outcome?

We have owned this property for a year and have one more year until we have to make the balloon payment.

Lessons learned? Challenges?

These properties have some deferred maintenance and the tenants are paying below market-rate rents due to that. I wish we had done a bit more investigating of the units to estimate and budget those costs of repairs ahead of time. The repair costs have been cutting in to our cashflow pretty consistently. I'm really grateful for the two investors we partner with as they manage the communication with the property management company and repairs.