Contrarian Investment play

[Tommy Ray]

Investment Info:

Large multi-family (5+ units) buy & hold investment in Clarksville.

Purchase price: $330,000
Cash invested: $1
Sale price: $550,000

This was a zero down deal. I did pledge assets to cross collateralize. Contrarian investor play. Value ~ $550,000 now. 8-plex

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

Knew the area. Knew that is was down for a specific reason and knew when the reason would end. A military 1 year deployment had taken 17,000 people out of a smaller market. Their return re-surged the market.

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

Sphere of Influence -- personal agent dealing with another agent in the same brokerage.

How did you finance this deal?

F&M Bank in Clarksville, TN. 20 year note, 5 year ARM

How did you add value to the deal?

Reset lease values $495 a door to $640 a door in 3 months. Linear effect to valuation. Income approach to property valuation the driver. Cost replacement approach second dominant method to an appraiser for value determination on this type.

What was the outcome?

Over time a free 8-plex. Currently cash flow!! Taught me pyramiding of equities through cross collateralization.

Lessons learned? Challenges?

No challenge--need more deals!

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

two agents mine and the sellers