Hi friends, a few weeks ago I posted the post “How did we purchase a 41 unit building…
Hey friends,
I posted the post a few weeks ago
“How We Purchased a 41-Unit Building Without Equity and by Creative Financing”
And I promised to share with you also how we acquired a complex of 5 buildings,
Containing 60 housing units occupied by 75%
No equity! And with a single investor.
Before we begin to go into details about creative financing,
A few words about the deal:
We got this deal from our team man
Who received it first hand to the owner in August 2018.
Our first goal in this transaction
Was to make Holsale on other entrepreneurs.
After about a month we could not find a potential buyer,
We sat and examined how we could purchase this property.
What we need to do in order for the deal to take place.
The purchase price was $ 1,350,000 (even before our tests)
We knew we would get a loan of about $ 900,000
Then need to raise a sum of $ 450,000
We started doing a few things at the same time
As you know the usual things:
Asset testing,
Advertising in social media for the purpose of recruitment,
We approached various investors.
There was not too much interest,
And the truth is, we did not try too hard to find investors.
We decided to put the property on a contract at $ 1,350,000
And put it on 90 a day.
During the day 90 we started the process of the loan
And we did more in-depth testing.
The first lender confirmed,
But after a few tests,
Demanded that we fix some minor flaws before the acquisition.
what??? Do you hear what you say ??? That we will fix ??
After all, the owner will not do anything he sells the property as IS
In short the first lender fell.
NEXT… ..
The second lender gives only short loans - 18 months.
What to do? Take !!!!
Continue testing and….
guess what???
We found some small flaws,
But this is real estate
And we were taught to make an interest in every little thing
So we did?
We turned to the owner and informed him that there were many repairs
So we have to talk about the price
We downloaded them to $ 1,250,000
The 90 day is approaching and there are still no investors,
What now???
We talked to the salesman and told him we were sorry
And that we have not received everything and that there is a new demand from the lender
And so we need another 45 day…
The seller thinks, and a day goes by telling us no problem
You seem serious to me,
You spent a lot of time testing.
During the day 45 we performed very comprehensive tests
To all the units, what we have not done before.
And another opportunity to lower prices.
After long negotiations and almost canceling the contract
We downloaded it to $ 1,100,000
After all, the property should be renovated.
You probably ask how he agreed?…
Are you invited to ask him?
I suppose he did not have the strength
Start posting your property online,
Because the next buyer who arrives will act just like us.
Now need to raise about $ 200,000
We decided to raise $ 300,000
In order to begin immediately the renovation of the units.
Another round of investors'
But nothing - well, this time too we did not really try.
Instead, we began to think
How do we buy this property?
But, pay attention
*** Without Investors ***
but how??? We do not have enough liquid money at the moment.
Well start to start the engines (brain)
And think outside the box.
We knew we had $ 900,000
And we're missing about $ 220,000
(I added $ 20,000 to all commissions, etc.)
We knew that at the moment we had no investors
And most of our equity lies in our other investments.
What to do, what to do, what to do ???
What OWNER FINANCING taught us
After 130 days they are
A few days before the expiry date we received
We turned to the seller and offered him to give us a loan of $ 220,000?
His jaw dropped to the floor? First Response No!
The next day no!
Well you have to sell it a little differently
And need an extension of another 45 a day.
I remembered hearing once (I do not remember who)
That there is an option to purchase the company that holds the property
And in such a situation there is no registration in the Land Registry.
You're probably asking why? And how does that relate?
We explained to the seller that if we purchased the property
Its at $ 1,100,000 and will be registered in the Land Registry
$ 1,100,000 We both lose ..
Our taxes will jump to the sky
(He purchased the property at $ 400,000 several years ago)
And therefore there is a great leap.
And he will have to pay lots of taxes on the profit…
He thought, and thought and Hoffe had an agreement !!!
But as usual not everything works as you wish,
The property is registered in the name INCORP
And we people are unfortunate without an SSN
Can not own INCORP.
What now??
Sitting and thinking and consulting with an attorney,
Tax advisors, lenders, brokers,
In short with the whole world and his wife.
And after the smoke came out we found a solution ..
Everyone knows him
QUICK CLAIM DEED?
About the same amount the seller purchased the property?
We have created Win / Win Situation for everyone again.
What you read in a few minutes
Up to this point in our story
Took about 7 months.
So we have all the funding,
But want to start renovating what to do?
Recruit an investor.
This time I did something a little different
I turned to one investor who is already invested with us
In another project, and I knew he was a smart investor,
Who can identify a good investment.
And I wrote him a Watsap message like this:
What is the situation?
I have another deal that might interest you.
Looking for one investor at $ 100,000
Multi-purpose property works
You have to close everything, including transferring the money
Within 10 days (this is the closing date for the asset).
Details:
Investment: $ 100,000
Annual yield: 10%
Project duration: 18 months
Buy Away Bonus: 5%
Total: 20% a year and a half.
If you're interested, let me know.
I received an answer two hours later,
Which is very interesting to him and that we'll talk in the morning.
We talked in the morning,
I explained to him that he was the first to turn to him,
That I apologize if it sounds like I'm pushing him,
But I have to reply by tomorrow morning (ie within 24 hours).
He asked for a contract and the next day there was a positive answer
And at a good time after almost 8 months
What at first seemed impractical cold!
And the deal closed?
The deal was closed because we did not give up,
We looked for and found solutions to all the problems in the way.
We have established a good relationship with the seller
And we also solved problems he encountered on the way.
In real estate, there are lots of underwriters
And you have to be creative,
You need to know immediately and be focused on a goal.
Hope this post helped you
Get some more tools how to produce
Win / Win Situation,
Make real estate through creative financing
And understand that real estate can be done through:
OPM - Other People's Money
OPT - Other Peoples Time
OPR - Other People's Resources
The original responses to the post can be read at the bottom of the current post page on the site or in the link to a post on Facebook and of course you are invited to join the discussion
- where is it? Queens New York?
- Ori Moshe
- Adi Shemi
- I'll take it
- June can explain what is Incorp and ssn?
And well done! Very enriching
- Ari Frank
- Nice!
- Nice, well done! How did you get a loan of 900? I mean without ssn? Because it is a commercial property, I believe it is easier, but you can still describe the process, and good luck!!
- Inspiring! Details about the loan ??
- Wow!! Amazing!
How did the
Quick claim deed?
And what is this?Except for the investor for the amount of 100k, did you take out another loan or was everything financed by owner finance for 1,100,000
? - Danny Trestian?
- Ben Ben Nahum
- Tal Saadon Noam Nahum Bomsham
- Well done! Just fascinating! ! !
- Ariel Ben-Hayon Carol Bergemann Croft
- Amazing Creativity ... Well done!
- Daniel Yosef
- Stunning!!!! No words
- Except wow I have nothing to say anymore!
?? - The story really is a beautiful masterpiece
- Patience and creativity ?? impressive!
- crazy
- Pros ??
- Wow,
What a beauty!!!
Really amazing description.
Besides being really creative and inspiring, you write in a really interesting and attractive way.
I really enjoyed reading
Breathe! - Super interesting thank you!
- Creative Wow
- Interesting story but I have a few questions.
The 900.000 loan were taken from Memi.
If you have done Quick Claim Deed then you have no insurance on the stake.And if the deal closes at the price the seller bought, 400,000 $ means how you transferred the $ 900.000.
And if you took a loan from him of 220.000 $ which is sometimes acceptable
owner finance.Did he agree that there would be a loan?
Second mortgage
??I am sorry for the cold response to all the other very gratifying reactions that I think stem from a lack of understanding.
- By the way, the person who told you that you can buy a company in America was right, but he should also have told you that the buyer of the company, even after the owner has changed, is obligated to the company's past debts or old claims if they arise, and even then you are obligated to pay stamps on the property upon purchase.
And therefore very careful to buy a company
Llc in America - Another thing the original amount of the purchase was 1.35 from
Therefore and rightly their ability to receive a loan of 900.000 that it 75% of the property and 25% of the remaining cash.But they have lowered the purchase price even as the loan amount goes down.
- And if nevertheless agreed to give you a loan on the property how it was recorded if the purchase price was 400,000.
- really amazing
- boom! I wrote to myself ..
- Ronnie Shoua
- Wow what a journey! Well done June. You played it. You have used many of the techniques discussed in the forum and have reached the desired result. Be strong and courageous!
- Aryeh Nahmani
- The post helped me appreciate you more….
- For some reason, I think there is no home, no loan, and there is only a story for a sleep. I read the comments here, and Yoav Benjo replied and wrote almost everything I had to write. Again, in my personal opinion this is a nice story and nothing more.
- thanks for sharing
Responses