8 Unit Multifamily for $3200 Down

[Adam Giles]

My partner and I were finally able to close on an off market 8 plex we have been working since December. We offered creative financing however the sellers ultimately wanted to wash their hands of it completely, and were willing to take a lower offer to do it quickly and without marketing/brokerage. I am posting this to share a couple of key points that continue to prove true on our journey. The first being that this deal never happens without the “team” that we built. Relationships are critical to being successful in real estate. I have a local agent with whom I have a great relationship, and they brought this deal to me. The deal basically breaks down as follows:

January of 2015 the property appraised at $440,000.

We offered $305,000 and it was accepted.

Gross rents are $60,000

Expenses are $22,000

NOI is $38,000

The second key point that I wanted to make was that we found out that the unicorn does exist. We had been speaking to another local lender that was very interested in doing business with us, and they approved 75% LTV on a new appraisal. Previously we have been dealing with the seemingly ubiquitous standard of "lower of appraisal or sale price".

New appraisal came back at $405,000

Because we were able to stay at 75% of the appraisal, after the tax credits etc on the HUD, we walked away from the table having purchased a well maintained, fully occupied, 8-plex for $3200 down.

This is, by far, the best deal we’ve ever executed.

Feel free to ask if anyone wants any additional details on the deal but I just wanted to mention it for the following points again:

1 – always be building relationships, even if you aren’t making deals yet. You never know which one will produce your best deal.

2 – If you want something, don’t stop looking for it. I have been looking for someone who will do 75% ltv on appraisal and after 3 years I was beginning to think it was impossible. I ended up finding it in my own backyard. It just took persistence and the right deal.