All Forum Posts by: Jesse Edwards

Hey everyone,

I wanted to share an exciting creative financing deal I just closed that resulted in over $50k in equity, with only $6k cash to close, plus many other benefits! My agent brought me a great off-market deal that for 140k, that I knew was worth much more given we've been working on other properties in the area. 

In fact, we have a flip coming to market soon and we really needed stronger comps to support the price point we're going to be pushing. So I started trying to get creative on how to create a win-win-win for all.

Here’s how it went down:

1. I got the sellers to agree to an asking price of $180k, a full $40k over what they originally wanted.
2. In the offer, we included a seller credit of $34k.
3. This strategy allowed me to cover the extra commission for both the buying and selling agents and ensure the seller got exactly the cash they wanted should they have sold it at 140k.
4. With the seller credit, this reduced my total out-of-pocket expense to just $6k.

I used a commercial DSCR loan product with a local bank. The flexibility with commercial loans is amazing. Normally, the cap on seller concessions is 6% of the sale price, but that's not the case for commercial loans.

Here are the trade-offs:

• 5-year stepped prepayment: A typical residential loan at this price point isn’t allowed in the state, but with commercial, those rules are different.
• 20-year amortization: This means higher payments, but it forced me to ensure my deal works under strict terms.
• Interest rate: It came in at 7.9%, not stellar but still good.

Overall, I’m pretty proud of this deal. Here’s what it netted me:

• $52k in equity at closing: The home appraised at $185k, a full $45k over the original asking price.
• A solid comp for my flip about to hit the market.
• A happy seller who got what they were asking for and more.
• Satisfied buyers and sellers agents with even more commissions.
• Only $6k down: This is about 3% of the purchase price.

I wanted to share this to help get your creative juices flowing when it comes to making deals. Sometimes thinking outside the box and leveraging different financing products can lead to amazing opportunities!

Feel free to reach out if you have any questions or want to chat more about this.

We purchased an older building and have been flipping several of the units. In doing so we determined we needed to upgrade the 50amp boxes to 100amp and took on this additional expense. Now as we started into the work we realized the exterior meter base (10 meter base) is all rusted and will not pass inspection. I'm worried this is now going to be yet another massive expense.

It seems to be a single meter panel with 10 - 12 meter bases is very $$ and hard to find. What cost-effective options are out there? Could we use 10 separate single bases? or a couple 6 base? My electrician is working thru options but I also want to try and think creatively as well.

The one advantage here is that unit 1 is currently sharing common power, and this would allow us to split it off. But that will hardly justify this cost I fear we have.

Thanks in advance!

Jesse

Thanks everyone for the replies

 Good Points, and one I am wrestling with as well, especially if to qualify I have to add yet another wall, it just kills function to meet specs. 

 Generally, yes. Every state that I've been in has a few basics

1. minimum sq footage for a bedroom, the room itself (usually 70 to 80 sq ft)
2. closet present in bedroom
3. a window in bedroom
4. not in basement, and if in basement, must have exit window of a certain size.
5. If an entry door is accessible via basement level at ground level, this is not considered a basement, however, the windows in the bedroom must be of "relatively consistent size" to above-ground windows.

Thanks, Amy, it's what I expected, but also unfortunate that is the case.

Agreed on the closet, the space between the "sleeping space" and the "living space" would be a closet. I need to add the doors. The latter (do I need a wall) is what I'm trying to get opinions on. Thanks!

I am sure this will ultimately be "ask your local appraiser" but I wanted to get thoughts here if you think this would count as a 1 bedroom. The plan is that the space between the sleeping area and another living area will have a closet with bi-fold doors. I just am trying to decide if I need a door and/or wall between the sleeping quarters and the living area to appraise as one bedroom. Also given this is in a 10-unit building does it matter, as the rent / NOI will be the primary driver for value?

I was planning on coming out tonight and bringing a friend. Is this even still going?

Thanks,

Jesse

I'm currently putting an offer on a property that has a Columbia gas regulator on it. It has been in place since 1950s and has been renewed for 10 years with the current owner. Upon buying does the lease stay in tact as-is with me becoming the beneficiary? Does a new lease get created? If a new lease is created given this has been in existence for so long is there an opportunity to change (increase) the terms of the lease?

Thanks in advance!

Jesse