On a Thursday, I looked in the paper under “investment property.” The ad read: “Great income potential, 3-4 family apartment $18,500, needs work.” So I called the number and went to look at it. The apartment did need some work. I went home, punched some numbers, and saw that I could make a lot of money on the rentals (two 2 bedrooms and one 1 bedroom).
On Monday morning, I called back to meet with the owner to negotiate a good deal. He notified me that in Sunday’s paper, he reduced the price to $15,000, and that six people had already called to look at it. I couldn’t believe it.
So I asked him how soon we could meet, and he said in about an hour. I re-did all the figures that I did for $18,500 to $15,000. Everything looked decent (no liens, good foundation, minor repairs), so I asked him why he was dumping it so quickly. He replied that his contractor quit on him and he just didn’t want to deal with it anymore.
Because I needed him to carry the note, I didn’t haggle at all. These are the numbers I gave him:
$15,000 Mortgage
10 Years
8% Interest
$181.99/month payment
He said we could close as soon as I had an insurance binder, which took about five days. Also, he took care of one year of taxes. I asked my father and some friends for help, and it was fixed up in about six weeks. I am receiving $1,200 a month in rent and paying $181.99 per month mortgage.
I’ve sat around too long watching and reading about other people making these kind of deals. I now realize how easy it actually is. The same guy has two two-family houses that we’re working on now. Here’s a new update: I will be closing on four more properties, fully rented, from the same guy with no money down and $1,800 positive cash flow. CRE Online has truly been an inspiration!