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Updated almost 6 years ago on .

User Stats

108
Posts
50
Votes
Lee Gierszewski
  • Investor
  • Bismarck, ND
50
Votes |
108
Posts

My no money down investment

Lee Gierszewski
  • Investor
  • Bismarck, ND
Posted

Investment Info:

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

Purchase price: $235,000
Cash invested: $1

I have to give a little backstory as to the purchase of this property. Me & my partner purchased 6 properties May 1 2018 for 960k. When we closed on these properties, we instantly had 110k in equity due to the appraisals coming in higher than our negotiated purchase price. We put all of the equity into a single property so a 163k valued property only had a 40k loan. When we saw this property, we had to have it and got it under contract even though we'd exhausted all of our money purchasing the last six. So we had to figure out how to find the 47k we needed for a down payment. We went back to our bank to see if we could refinance our property with all the equity and our banker said she would try even though we were no where near the minimum seasoning for our loan. As a backup plan I also reached out to another friend/investor who said he'd "spot" me the 40k to pay off the other properties loan if our bank wouldn't let us refinance. Any way, our bank was able to refinance our 163k valued property at 80%ltv. This gave us 130k to pay off existing 40k loan leaving us 90k. We used 47k to make the down payment, paid ourselves 10k each, put 10k away for property taxes and put the rest into our business checking acct,. So basically we have no money in this deal and actually got paid for making it!
The main floor rent is $1200, Basement $800 and the two upstairs unit are at $750 for a total of $3500/mo in rents. Our CoC return is over 30%.

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

The numbers we figured we could get for rent made this a deal we had to have.

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

We found this deal on the MLS. They had an open house, but we missed it. I contacted the selling realtor and asked if I could do a showing as I am also a realtor and he said sure and that him and the seller would be coming down as well. When they arrived, we negotiated right in the house. We said we wanted it. The asking price was 242k, we offered 235k and it was agreed upon. We also knew the seller so it made the negotiations a little easier.

How did you finance this deal?

We refinanced a recent purchase and pulled 130k out of that deal. $40k to pay off existing loan, $47k to make down payment on this property. $10k for me and my partner, 10k went to taxes and the remaining 13k or so into the checking account.

How did you add value to the deal?

So far we have made a few repairs and have paved the parking lot. We are looking at adding garages this summer

What was the outcome?

So far this property has been our best property in our inventory regarding cash flow. It consistently brings in around $1560/mo in cash flow.

Lessons learned? Challenges?

Go for it. If you believe deep in your heart, and your numbers that a property is good, just do it! When we got this property under contract, we had no idea where we were going to get the money to pay for it, but when you need to figure it out, you will if you have the drive.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Yes, I am a real estate agent, My partner is a property manager, our lender I would recommend to anyone looking to invest.