First Seller Financed Deal, $500 out of pocket.

[Melissa Dorman]

Investment Info:

Small multi-family (2-4 units) buy & hold investment in Portland.

Purchase price: $730,050
Cash invested: $500

This was my first seller-carried purchase. I negotiated a delayed payment to rent out 2 vacant units and got a second mortgage for the downpayment and only had to pay $7,000 at closing for closing costs and remainder down pay. I leased up the vacant units and collected rent a couple months. By the time my first mortgage bills came, I was only $500 out of pocket. There are a few other tools I used that I can share over a cup of coffee. Great building and I am still close friends with the seller.

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

Seller financing and cash flow on interest only payments.

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

Cold calling and befriending the seller. I negotiated it over a cocktail or two.

How did you finance this deal?

Seller financing and a small second mortgage for $10,000 for the down payment.

How did you add value to the deal?

I helped the seller avoid capital gains and net more over the course of the seller financed loan than he would if he got an all cash offer. I property manage and he gets a great check each month, without doing any work.

What was the outcome?

I got a triplex for $500 out of pocket... and a great friend for life (the seller).

Lessons learned? Challenges?

It's important to do a reconveyance on your trust deed at the time of signing. This saves you costs when you go to reconvey later.