Latest Deal. House hacking and seller financing.

[Brett Merrill]

Investment Info:

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

Purchase price: $408,000
Cash invested: $40,000

A 4-Family purchased with seller financing. House hacking was used to live for free while completeing the necessary repairs.

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

My current focus is the buy and hold acquisition model for multifamily properties.

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

Family friend that let me know of a property owner that was sick of all the headaches of managing his property.

How did you finance this deal?

Seller financing of the seller holding a second for 15% of the down payment and I provided 5% down cash. The loan has a 10 year balloon and an interest rate of 4.5%.

How did you add value to the deal?

By doing minor/moderate repairs to each unit resulting in the ability to raise the total rent/month from $4800/month to $6100/month. The repairs also resulted in a increase in appraised value to allow for a refinance to pay the balloon.

What was the outcome?

These repairs allowed me to increase the rents to $1300, $1500, $1500, $1800 for a total of $6100/month. The property has already significantly increased in appraised value and should be able to be refinanced to pay the balloon in no more than two years. The property cash flows $1600/month and provides a 35% ROI.

Lessons learned? Challenges?

I learned a lot about structuring a deal with seller financing and will certainly be using it in the future.

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

I am an agent myself so I structured the deal around that with attorneys.