I'd just like to share my first buy and hold transaction that really highlights the thrill of the chase and the multitude of choices available to limit capital exposure and close deals successfully.
This sale is a family sale, with gifted equity. Not a bad situation to walk into for he first deal. Parent had moved down south and wanted to get rid of her property. I was interested solely as an opportunity to provide a home for her into her twilight years.
Property is a duplex. 3br/2ba in front and 1br/1ba out back. Front rents for $700/mo and back for $450/mo.
Duplex appraised for $95k, was able to purchase for $62k. Found a bank that allowed the equity to count toward the down payment, and seller conceded to small closing cost amount.
After PITI property cash flows $450/month.
The lot that the home sits on is in a village and had a large back yard that required mowing, weeding etc. I sent letters to adjacent neigbors and offered to sell the "back 40" to any that would be interested. One neighbor jumped on the opportunity and we structure a deal to sell the now subdivided lot for $4000.00 and he would plow/mow for one year until systems were in place.
On the subdivision: Surveyor costs were $670, two visits to the town supervisor (free), filing and lawyer fees of $706 etc.
In the end, I had purchased a home with no down payment out of pocket, $33,000 in equity, $2,624 sale from the back lot and $450 monthly cash flow! I now intend to grieve the tax assessment after the subdivision and increase cash flow.
Let me know what you think! Creativity is a wonderful thing, and the sky is the limit!
