Investment Info:
Other commercial investment investment.
Purchase price: $280,000
Cash invested: $240,000
A mixed use 7 acre property that had 2 mobile homes on it. I was interested in making a commercial investment of some kind (RV Park) and leverage its proximity to the Circuit of the Americas racetrack. Never was able to get the cash together at one time to develop and ended up selling to my neighbor in an owner financed deal.
What made you interested in investing in this type of deal?
I was trying to build an RV park and generate some long term cash flow from a business. This never materialized and instead I worked an owner finance deal with my neighbor for 330k/9 years/3%.
How did you find this deal and how did you negotiate it?
I was driving around and saw a for sale sign of a property across the street from COTA. I thought it would skyrocket in value due to the proximity to the racetrack. It didn’t skyrocket but I was able to sell the property for 50k more than I my cash outlays to acquire the property. This 50k doesn’t include the interest on the principle over the 9 year period. Overall this was the luckiest investment I fell into.
How did you finance this deal?
I had a 40K bonus from a large sale from my 9-5 that I used as a down payment to enter into an owner finance deal to purchase. While I am happy with the outcome I also had the opportunity to invest that money in bitcoin while it was still at $10/btc. Can’t say I don’t have regrets.
How did you add value to the deal?
I cleaned the property and refurbished the septic systems that the neighbor was most interested in. He was able to add a few more mobile homes on the property and is very successful which means I get paid on time every month.
What was the outcome?
3200 in cash each month without any other mortgage payment. I refinanced with the owner once to lower payments. He passed away and I was able to negotiate a final discounted lump sum payment to the estate funded by a refinance of one of my other properties. I owned the property for one day outright before I sold to my neighbor.
Lessons learned? Challenges?
I think the biggest lesson learned (other than my failure to buy bitcoin instead) was to ensure I had a solid cash flow plan to implement the vision. I didn’t have the cash to develop the property and even ended up refinancing the owner financed note (with the owner) to lower my monthly payments when I took a job that paid less.
Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?
I worked with the property owners’ realtor who I thought was not very good. In the end I developed a relationship with Ten Sleep Creek Attorneys in Austin to rewrite the deed of trust / promissory note terms for a refinance and then again for my own owner financed deal to my neighbor.
