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Updated over 5 years ago, 05/16/2019
Owner Financing - 11 Unit Apartment Complex
Investment Info:
Large multi-family (5+ units) buy & hold investment.
Purchase price: $500,000
Cash invested: $100,000
11 Unit Apartment Complex
What made you interested in investing in this type of deal?
I became interested in this deal because of the success had from two previous Multi-Family investments.
How did you find this deal and how did you negotiate it?
I found this deal by searching every single multi-family property through out the county assessor website. I then narrowed down a list of properties that would be within my purchase price range. I found the owner's address and went to their doorstep asking if they were interested in selling. At the time they were not interested but asked me to check in with them at a later date. A year later I wrote a handwritten letter and received a phone call stating that they were ready to sell.
How did you finance this deal?
Initially the seller wanted to sell the property through conventional means, but through my Biggerpockets education I was able to confidently explain property valuations and the benefits of owner financing. The owner agreed to a down payment less than the conventional financing requirement. I purchased this property at a 9.7% cap rate.
How did you add value to the deal?
I plan to reduce management, and landscaping expenses and raise rents to market rent. There is also a large storage unit on-site and I plan to rent that out as soon as the previous owner removes their personal belongings.
What was the outcome?
This is a new acquisition and the outcome is yet to be seen. I plan to refinance through conventional means once I have effectively raised the NOI.
Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?
Cheryl Lakey of Chicago Title has set up the financing documents. Strongly recommend.
Congrats Casey! Way to do the work.
That is amazing. I'm very interested in owner financing, but still a bit hesitant on how to bring it up and pitch it correctly. This was great motivation!
This is great info @Casey Roloff, thank you for sharing how you went about it!
Very interesting thread. I was interested in the nuances that convinced the owner to go the seller financing route. Thx for sharing @Casey Roloff
Hell yea, congrats, and thanks for sharing.
Congrats! I am interested on reading the 1 year and 3 year follow-up also.
Congratulations! I am interested in the Seller Financing terms as well. Also curious as to why you want to refinance under a conventional loan?
Congrats! Thanks for sharing!!!
Please keep updates coming as you do things such as raise rents.
sincerely, your neighbor in the frozen north
Hi Casey looks like off Ave B. ? We should meet up sometime.
@Casey Roloff congrats! I would love to be able to purchase an apartment complex this size in the next 10 years. I have 1 duplex now and am looking for my next 2-4 unit. How did you get into mult-family and how much do you antcipate this will cash flow once you have market rents and the storage unit rented?
Strong work. These stories inspire me to make that 1st step. Thank you.
@Justin Lee Frye
I think after raising the NOI, the bank will lend more $.
@Farrukh Amini @Jason Dufault @Trey Mattox @Mary Mcallister @Justin Frye
Loan Terms - 500k Purchase Price @ 20% down. 5 yr Interest Only @ 6% Simple Interest. No pre-payment penalties.
@Justin Frye. I will cash out refinance once the property is stabilized and I have raised the NOI creating a higher market value. I'll then reinvest the funds into an additional property. Check out the BRRRR method, mentioned frequently during the Podcasts.
@Josh Cook. I began investing with SFR properties, and being completely uninformed I thought it would be great to acquire a 15 yr mortgage and rent the property with no cash flow. I didn't take vacancies or capex into consideration. I held the property for two years and luckily came out ahead due to appreciation. During that timeframe I was introduced to Biggerpockets and began analyzing the local market and found that MFR properties had the best returns for buy and hold investments.
I expect the property to cash flow between $2000-$2500 per month, after taking into consideration all expenses, capex, and vacancies.
Excellent job, congrats. I am a newbie at real estate. What is the county assessor website?
@Casey Roloff
Would you have jumped on this deal when you first started? Why or why not?
@Casey Roloff awesome job!
What did your first multi family deal look like when you made the transition from SFR?
@Casey Roloff, thank you for sharing this win!
Love the seller finance stories! Why use a bank when you don't have to!?
I hope to duplicate this effort in my own market! @timmcinerney
Sounds like a good deal in Yuma! Would love to see the income and expenses. What is the going market cap rate on these properties? Do you have the ability to raise these rents?
Love the owner fi opportunity, great work!
Originally posted by @Casey Roloff:
@Justin Frye. I will cash out refinance once the property is stabilized and I have raised the NOI creating a higher market value. I'll then reinvest the funds into an additional property. Check out the BRRRR method, mentioned frequently during the Podcasts.
So when you do a cash out refinance through a conventional mortgage are you not cancelling out all of the selling points you used to talk the seller in to seller financing?
@Pilar Lazzati a database full of property info for a certain county. Google 'Your County' tax assessor and look for property search. You can input addresses and get info for the property, such as tax info, purchase price, purchase date, owner's name and mailing address, etc.
@Casey Roloff Congrats on staying persistent and actually door knocking to get a direct line of communication with the seller. Takes guts to do that. All the best. Wishing you continued success.