Our fantastic 2017 so far...

[Mike Robberson]

We have had an amazing (for us anyway) 2017 so far.  We started the year with just 1 little rental house.  Now, I'm going to start with the result of the last 9 and 1/2 months before I tell the story of how we got there: to date we have acquired 35 units not with $0 down, but with less than $0 down.  We walked away from our 3 deals with over $35,000 in our pockets! So, if you are interested in how we did it read on.

It started in January with a duplex.  I had partnered with a life-long friend and we were due to close in a week (which was late because we were supposed to close by Dec. 31st). My partner had learned about a loan option at the bank we were using for rehabs.  So, instead of having to put down 15% of the contract price, we would have to put down 15% of the after repair value...so we asked the seller for another extension to give it a shot.  We listed some improvements, which were mainly cosmetic, and got the new adjusted appraisal back. The contract price was $120,000 and the new appraisal was $137,500. So, we had to come to the closing with a little over $3,000 plus closing costs.  For us a light bulb went off.  If we can do this with a duplex, why can't we do it with a larger deal...

Fast forward 2 months, our property manager calls us and says I have a family here that is looking to unload their portfolio.  "Well," I said, "how many properties do they have?" "200 or so" she says. In my mind I was thinking well that's too many, but I said we'd take a look at them.  So, we got the info, my partner and I each took a day off of work and we drove like madmen all over town looking at these properties.  They were mostly junk, but we did manage to identify 18 units out of the 200+ that we wanted to make an offer on.  So, we had our PM write up the offer and send it over.  Then, to our dismay, the family went silent.  They didn't respond for months.  We were pretty disappointed, but we didn't give up.  We put that info on a shelf and had our PM reach out every few weeks to get a response from the family.  That was March.

Well, April rolls around and we locate another property owner with a small portfolio.  This was a lady whose husband had passed away, they lived out of state, and she wanted to sell the whole group.  She had 15 units.  So, we took more time off work, drove the properties, and created our rehab list, which again was mostly minor cosmetic stuff.  We got an offer of $620,000 accepted and now we just needed the appraisal to come back at $730,000 or better.  Our total rehabs amounted to $45,000 or so.  When we finally got the appraisal back it was $845,000!  So, we closed the deal in May with no money out of our pocket and actually walked away with a check from the bank for over $35,000.  Now we were up to 18 units, 17 this year alone.

The last chapter of this story came 2 months ago toward the end of July.  The family from earlier in the year reconnected with our PM and explained that they had gone through some family drama which was the reason for their silence.  They were now ready to continue with selling their properties.  We had our PM immediately redo our offer and they accepted.  We spent more time meeting with subcontractors to create a list of rehabs for these properties (these required way more work that the first portfolio).  The final numbers were: Contract price $450,000, rehab cost estimates: $350,000, after repair appraisal: $922,000.  So again we were able to get the full purchase price, closing costs and $337,000 or so of the rehab costs all financed by the bank.

So, there you have it, our 2017 so far in a nutshell.  This post is already very long and I'm sure there are things that I've left out.  So, feel free to post questions in the comments section.  I'd love to hear from you all.