Unique COZY cottages DEAL!

[Roberto Sembiante]

Investment Info:

Other buy & hold investment in East Hampton.

Purchase price: $275,000
Cash invested: $45,000

I came across this deal through a Facebook group I posted in. I posted in several groups something along the lines of "Hey folks, I am looking to acquire 4 units within the next 3 months. I am considering properties from 2-8 units. Cheers." The seller messaged me directly and we started to build a relationship over his situation. He is a long time real estate investor with many properties in CT, looking to move to Florida by the end of the summer and needed his properties sold. He wanted 325,000 initially but after showing him the numbers and my investment criteria we negotiated to 275,000. The two properties are comprised of 3 separate stand alone cottages over two plots of land with one water well, confusing right? With a deal this unique finding financing that would take both proved to be quite the challenge. My plan was to get a owner occupant loan (my office had wanted to move me to Connecticut in the fall) at 15% down, wrapping both properties into one loan. I eventually found a lender that would accept the deal for 3.6% as long as it appraised for 75% LTV. The appraisal was coming in close to the closing date, 5 days from closing to be exact. Due to the unique nature of the deal and the loan I was after, things went a little sideways. When the appraiser compared the property, he did so with other three unit SINGLE structure buildings with similar total square footage to the total of the THREE structures of mine combined. This caused the appraisal to come in under and within a week of closing. I knew that if I wasn't able to find a way to get this to close the seller could make far more putting it on the MLS in this market. So I reached for another pain point many of us feel, taxes. Being that the seller is offloading 10+ properties this summer he would be hit with a grand slam tax bill. So I offered him a way out with seller financing. Instead of getting 275,000 upfront, he has secured a 1500+ (15% down, 5%, 20 year fixed) stream of cash every month lowering the amount he will owe in taxes and giving me an extended timeframe to be able to find the best financing option available. DEAL CLOSED!

Lessons learned:
Know exactly what you are looking for and let those around you know what that is.
Depending on the scenario, showing the seller how you got your maximum offer can help.
Unique deals present unique challenges, prepare yourself to be flexible.
Building rapport can save you the deal.

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

I wanted to acquire 4 units this quarter, although this one was only three it fit the bill.

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

Facebook group. Seller messaged me directly. His price was too high. After showing him why we agreed at a drastically smaller price.

How did you finance this deal?

Seller financing.

Lessons learned? Challenges?

Know exactly what you are looking for and let those around you know what that is.
Depending on the scenario, showing the seller how you got your maximum offer can help.
Unique deals present unique challenges, prepare yourself to be flexible.
Building rapport can save you the deal.

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

Dream home inspections, phenomenal inspector and local flipper in the area.
Seller, who may be looking to offload more properties...