Seller Finance (slow BRRRR)

[Josh Young]

Investment Info:

Condo buy & hold investment.

Purchase price: $280,000
Cash invested: $7,000

Light rehab, rent, and 30 month balloon to refinance. After 30 months I will have paid the loan down a little, forced appreciation, might have a little market appreciation and hopefully interest rates are lower in 30 months then they are now. If everything goes right I will be able to refinance and will have created 25% equity, or I may end up having to bring $10-20k to the refinance to get the 75% LTV depending on the appraisal, but even if that's the case it's still a great deal.

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

I own 5 other properties in Gilbert within 2 miles of this property and I'm very confident in this area long term.

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

The seller was my mentor when I first started buying rentals. He is on the other end of his career now and I've been helping him sell properties as his agent. He wanted me to sell the property for him, I knew it was paid off and I knew he didn't need the cash since I just sold a property for him a few months ago, so I presented the idea to him. I gave him 3 different seller finance options along with other options of selling the property for him and after some discussions we found a win win.

How did you finance this deal?

I paid both sides of closing costs. 100% seller finance, 5% interest, amortized over 23 years, with a balloon payment of the principle balance due after 30 months. I plan to refinance and pay him off when the balloon payment is due.

How did you add value to the deal?

Light rehab, paint, blinds, fixtures, and paint cabinets. There are already new floors, countertops, and appliances.

What was the outcome?

Just closed today.

Lessons learned? Challenges?

Giving the seller different options during the negotiations was really helpful because it let me find out what was really important to him and allowed me to make changes to my offer, so we could come to terms that worked for both of us.

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

I am an agent.