Creative financing house hack!

[Kyle Stueven]

Investment Info:

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

Purchase price: $445,000
Cash invested: $15,000

This deal is a 6 plex that I was able to buy for $445k with $15k down with owner financing. My wife and I are currently living in one of the units and renting out the other 5 units, cash flowing about $800 per month and living for free!

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

This deal was perfect for us because we had just moved back to Ames and were living with her parents trying to figure out what our next living situation was going to be. We were looking to find a house hack deal and this deal kind of just fell in our lap and we jumped on it.

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

I built a relationship with a guy from church that is a real estate investor as well, and we got to talking about real estate and he mentioned he had a six plex on the market right now and asked me if I would be interested in doing an owner finance deal so that he could refinance and pull out some money to invest in a syndication while spreading out his capital gain tax and I could accomplish my goal of house hacking a property, so I took him up on it and negotiated based on the income.

How did you finance this deal?

It was an owner finance deal, so I put down $15k and he is financing the other $430k for me at 6% interest, amortized over 30 years, with 2 years interest only and a balloon payment due in 8 years.

How did you add value to the deal?

There was one unit vacant when we bought the property so my wife and I have completely remodeled that apartment. We are currently living in that unit but as we have some vacancies we plan to move throughout the building and remodel every unit and increase the rent income.

What was the outcome?

It has only been two months of owning it, but we have essentially eliminated all our living costs and we are living in the nicest apartment we have ever lived in because we renovated it ourselves. It is a freeing feeling to not be reliant on a job to provide for living expenses and as time goes on will allow us to save a lot of money which will be used to grow our portfolio.

Lessons learned? Challenges?

The key lesson I learned from this deal is how important networking is and not only that but being mentally and financially ready to jump on an opportunity when it is presented to you. It is important to look for a scenario that is beneficial for both parties involved.