The power of creative deal structuring

[Farrukh Amini]

Investment Info:

Single-family residence other investment in University Park.

Purchase price: $130,500
Cash invested: $15,000

Creative deal (subject-to)
3bed/2bath SFR/renovated in 2016/2car garage/6k sqf yard
Purchase price: $130.5k
Down: $5k
Closing and repairs: $10k
(total out of pocket $15k, took over $125.5k loan with 4.5% rate)
PITI: $1347/month
(No other expense as we're the bank)
ROI:
All out of pocket: $4k (20k from buyer - 15k buying costs - 9k selling costs = 4k left in the deal)
Cash flow: ~$350/m ($1700 from buyer - $1347 PITI = 353/m profit)
CoC: 105% ($4.2k annual net / 4k cash in the deal = 105%)

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

tired of being a landlord and dealing with tenant/property management, so started to pivot from being a landlord to becoming a bank

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

through marketing and networking with wholesalers - asked for their trash leads

How did you finance this deal?

own funds (myself and my partner)

How did you add value to the deal?

Buyer needed to relocate for a job transfer and wanted to sell, but due to market prices and the amount they owed on their mortgage, they would've had to come out of pocket ~$10k to sell with an agent. We came in with terms offer and solved their problem saving them about 10k in selling expenses, and giving them money to move and close on the date of their choice. Seller didn't have to list and have the property sit on the market for 60-90 or more days having to pay additional mortgage plus rent

What was the outcome?

Dispo: sell on owner financing with CFD (deed stays with us until paid in full)
Sell price: $161k (Owner financed at 7.9% on a 30yr amortized loan)
Down Payment: $20k (12%)
PITI: ~$1700/month
(Buyer responsible for all expenses and benefits of homeownership)

Lessons learned? Challenges?

Remote market - virtual. Had to quickly reach out to people and put boots on the ground to facilitate the entire process.

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

Brittney Wikinson with Compass is a beast!