My BEST DEAL in 2017

[Shiloh Lundahl]

We have accomplished a lot in 2017 which I will be recapping in a week or two entitled 11 BRRRRs in 2017.

As for right now, I wanted to share my favorite deal of 2017.

My partner saw a property come up on the software that his brother made to analyze the MLS and notify us of potential deals in Arizona. This property was a manufactured home on an acre-and-a-quarter out in Apache Junction. It was listed for 160k. The ARV was about 180k - 190k. That doesn't seem very exciting, however, it was being sold with the acre-and-a-quarter lot next to it that had 2 dilapidated houses on it.

When we called to put in an offer, we found out that the property had a few offers already.  So, even though my partner is an agent, we asked the seller's agent to represent us and to put in a competitive offer for us.  He wrote up the contract for 170k which got accepted by the seller.  During our inspection, we found out that the plumbing was bad on one of the dilapidated houses so we renegotiated back to 160k and the seller accepted.  

Here are pictures of the manufactured home and dilapidated houses.

We have a good relationship with hard money lenders in Arizona and one of them gave us the 160k for the purchase.  We then partnered with another investor who came in with 10k for the repairs on the manufactured home (roof repair, skirting, adding a fence, and a few more miscellaneous items).  

We then leased out the manufactured home on a lease option for 195k with a 5 year option a week after we closed on the purchase. We then listed the other parcel on the MLS. Within a few days we had multiple offers on that parcel and we closed on it a few weeks later for 105k. After closing costs we applied around 96k to the hard money loan.

Now we have a hard money loan of 64k on a property that we have leased out with an option to buy at 195k. We are currently working with a bank to get a loan on the manufactured home.  They want my 2017 taxes to close the loan, so it looks like we will be in hard money until March or April.

Here are the numbers

Purchase price (from hard money lender) 160k

Closing costs (paid by me) 2,409.22

Repairs (paid by investor) 9,634.23

Option fee received from new tenant 5k

Sale of other parcel 105k (96,201.04 after closing costs) applied to hard money loan.

New loan from hard money lender 64k

Our total into the property 5,000 (option fee) - 2,409.22 (closing fees) = 2,590.78 cash back

If we don't get the loan on the property then we will pay off the investor 10,790.33 at the year mark.

Cash flow is 438 (219 each)

Our total profit over the next five years on this property if the tenant exercises the option at the 5 year mark will be 142,900 (71,450 each). It will be less if they exercise the option early.  It may be more if they don't exercise it and we hold the property longer.