All about structuring the deal

[Frankie Renaldi]

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $84,000
Cash invested: $9,000

3 bed 1 bath cape cod, corner lot, fenced in yard, hardwood floors, good room sizes.

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

We like SFD (like multis as well, but SFD offer quick exit if capital is needed). We almost didn't look at this property. At the list price of 100k we assumed it was half way condemned. 1 bad pic in the front made it look like a 700 sq ft salt box. We decided to see it anyway and discovered a fantastic find. One of the only detached properties on the block, hardwood floors (needed finished), large bedrooms and amazing fenced in corner lot. Great property, now to make the deal

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

It was listed by owner. Called the owner directly set the showing and within an hour had the offer out. Listed at 99,900, offered 78,000. My Max was 84k his bottom line was 89k. We structured owner financing with guaranteed interest to help close the gap and I waved my commission. We settled on 84k with those terms and closed a month later. Only 7,500 in rehab (paint, fix hardwood, minor heating, and a fridge) and it is now worth approx 135,000 & rents for 1380/month no utilities included.

How did you finance this deal?

Owner financing for 6 months then cash out refi to 20 year commercial

How did you add value to the deal?

bought under market plus added value add in cosmetics, flooring, and appliances. Adding washer and dryer increased rent by 360/year.

What was the outcome?

Great stable property with good cashflow. No complaints at all!

Lessons learned? Challenges?

never discount a possible purchase due to the photos or a photo. Home doesn't have to be in terrible shape to have meat on the bone....and never ever let a deal die if you want it. Structuring the deal like I did with Brian was the bets way to make us both happy and both hit our numbers. Win Win and Brian and I have now conducted "realtor" related business and created a friendship.

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

I am the agent. Funding was done with First Keystone Bank in Bethlehem PA Mike Santiago was the lender.