Creative Finance for Multifamily

[Logan Pritchett]

Investment Info:

Large multi-family (5+ units) buy & hold investment in Kentucky.

Purchase price: $375,000

My two partners and I used seller financing with terms that created a win-win scenario with a distressed seller for the purchase of 9 mobile home parks in KY. We purchased two of them and have an LOI on 7 more. We bought these for $0 down (not counting closing costs).

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

The heavy cash flow that comes from mobile home parks when having TOHs in place makes the investment worth your while.

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

We found it off facebook and we discovered a distressed seller with a very distressed property. We were willing to fix his problems on our terms for his price.

How did you finance this deal?

Seller Financing. Zero of our own money down (other than closing costs).

How did you add value to the deal?

I found and put in place property management. I keep him in check and I focus building relationships with any business partners we come in contact with. I make sure tasks get done, underwrite the deal, and cover our bases to make sure we handle things ethically and legally.

What was the outcome?

We own the park still and are rehabing distressed trailers, filling in vacant spots, increasing rent, stabilizing the park, building automatic systems, and putting signed leases in place.

Lessons learned? Challenges?

There is high negotiating power when a seller has failed to keep finances in place, struggled to maintain rent collection, and lives out of state. Networking and building relationships will build trust. Trust allows you to build terms that will benefit you.

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

I am an agent and a broker for private money. So I had a lot of value in my knowledge of the market and back up funds if necessary.