Seller Finance Airbnb to Flip

[Carter Still]

Investment Info:

Single-family residence buy & hold investment in Oklahoma.

Purchase price: $175,000
Sale price: $200,000

A friend was moving out of state for a new job, and hadn't owned his house very long so didn't have enough equity to sell for a profit (after selling costs). He had purchased for $167K, and had a mortgage. We did a contract for deed, and promissory note, with 2 year term, based off of my PP such that my monthly payment to him covered his mortgage, taxes, insurance, and paid him some cashflow. For me, I was able to put $0 down, cashflow immediately, and about 18 months in I sold it for $200K.

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

No cash required

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

High level of trust between good friends allowed for an otherwise risky arrangement to run smoothly. Due to the no cash and 2 year term, I could offer seller a higher price than I otherwise could have, then I was able to reduce my basis via Airbnb'ing the property for 18 months, and then sold for $25,000 more than I bought for due to better than expected market appreciation.

How did you finance this deal?

Seller financing: Contract for Deed & Promissory note (5% interest, 30 year amortization, 2 year term, 100% LTC)

How did you add value to the deal?

Time. I bought the furniture, appliances, decor, kitchen utensils, etc... from my friend as a separate deal, used it to airbnb without much effort, took great care of the property for the duration of my ownership.

What was the outcome?

The friend who sold to me was able to build more equity and sell without any closing costs, and I was able to profit from cashflow and then sell for $25,000 more than my purchase price.

Lessons learned? Challenges?

Be creative! Track everything!