Posted by Kelvan on April 29, 2000 at 23:32:38:
I just bought an 8-unit building in the PHX Metro area and ended up with cash at closing. We found a private mortgage to cover the first 60% (@ 12.5% interest) and the owner carried the other 40% on a second (@ 8% interest). Both notes have balloons due in five years. I gave the owner full price (which amazed him, because one unit is vacant, but he’s an out of state owner so it’s tougher for him to manage than me). The contract we signed gave me all the deposits ($1400) and 27 days of pro-rated rents (almost $2000). There were some other concessions in the contract as well for deferred maintenance. The bottom line is, he’s been milking this property for 10 years and got to keep over $80,000 of the cash from the first. (The key here was, he had lots of equity, so getting a full price offer and then crediting it back to me at close still FELT like a full-price offer to him, which is equity he didn’t really earn.) P.S. Even with the one vacant unit, I have $185 positive cash flow each month. I haven’t read LeGrand’s stuff (yet), but in creative real estate, there’s definitely more than one way to skin a cat.
Keep at it, everybody. The circumstances are what really make these deals fly.