Getting My Investors Big Wins

[Paul MacInnis]

Hi all,

I recently read a great success story by @Huy N regarding a deal he carried out in Texas and it made me realize that reading success stories is a great way to reinforce the awesome power of REI.

Recently I wrote a blog post about a deal I closed on a triplex and while I don't want to go through the details of the acquisition if you'd like to read more - please do so here.  (https://www.biggerpockets.com/blogs/8314/50302-pod...)

The point of this story is to tell you about how I helped to create some awesome "wins" for my investors.  

So my triplex was 127,500, I put 20% down ($25,500) plus closing costs brought me to about $29,000 needed to close.

The building was purchased under value - and expected appraisal for a refi in 12 months is at least 170k.  It appraised for 180k in January of this year.  

I won't bore you with details - but the cash-flow is approx $800/month after a few small alterations from my BP analysis were done for the JV agreements.

Investor 1 - Gave me $10,000.   He's a passive investor in that he wnats absolutely nothing to do with the property.  

He will receive - $150/month for 12 months plus a $500 bonus after the refi.  Total monies received = $2300.   2300/10000 = 23% return.

Investor 2 - Gave me $17,000.  He's an active investor and will actually manage the property for the 1st year.   

He will recieve 50% of the cash flow each month (after all expenses including CAPEX are deducted) - which will average out to $400/month.

After the refi - he will recive 60% of the difference between the amount left owing on the mortgage and the new value.  So, conservativley, at a 170k appraisal - an 80% loan will be 136k.  If we subtract approx 102k that will leave 34k.  So he will receive 60% of that which is $20,400.   This is his original 17k back plus $3400 more.  All told his return will be:

3400 + 4800 (cash flow) = 8200/17000 = 48.2%.

Needless to say - both investors are very happy!  As am I.   

This isn't an every day deal but over time, if you're consistent - these types of deals are out there.   Hope you all enjoyed the info!