Use The Rents… Here’s an example: - Posted by Vince
Posted by Vince on January 09, 2001 at 08:57:08:
Something that should get you really excited is that if you schedule to close the deal on the first of the month, all the rents (first and last month) and all the security deposits become your posession!
Some states have laws governing what can be done with the security deposits and require you to keep them seperate. But the rents are due on the first of the month (verify this with your seller).
Simply add up the amount of all the rents (first and last) from each unit. That total is what will become YOUR property on the day you close the deal. So, you can subtract that amount from the down payment you need since those funds will be available to you at closing.
If that doesn’t cover the entire amount of the down, simply ask if the seller will allow you to make payments on the rest of the down, to be paid in full by a certain date. Then, use the rental income over the first few months to pay that amount to the seller.
Seller wants $15k down payment
Rents for all 16 units = $7200 (based on $450 rents)
Deposits for all 16 units = $7200
Total due to you at closing: $14,400
Simply tell the seller that you’ll give them the $600 you owe them in the form of a short term note or just give them the $600 out of your pocket at closing.
If you need to cover closing costs, just use rent and deposit proceeds to cover those and just ask the seller to take back a bigger note for the down payment.
Hope this makes sense. It’s a powerful way to get into a multi-unit property with little or no money down.