Investing in the US through creative financing

I would like to dedicate the following post to anyone for whom investing in real estate in the US seems impossible. (Believe it catches on in the rest of the world too?)
Why? Because until recently I was there too.
I deserve to give you some inspiration beyond that and show you that everything is possible and only needs to be continued, even if it seems completely impossible.
Just keep going and not give up.

For me, the title for today is:

How my partner and I purchased a 41-unit building in the United States
Without equity and through creative financing.

You're probably asking what creative funding is… ..
My definition of this is:
Activate your mind and create an unconventional way to obtain financing through loans, investors, owner financing, and any other kosher and possible way.
I too was skeptical once and did not think it was possible to do real estate without equity.

So not only is it possible, it's extremely possible. But when it comes to big deals like the one I'm describing here, I think you should have a little track record before.
That means you have proven experience in real estate. I will be precise and say that everything written here refers to multi-family complexes.
It is important for me to emphasize that this multi-family is a completely different animal from the usual real estate investments (private home renovation, new construction, renting several properties, duplex, etc.),
And requires great knowledge (at least in buildings of 10 units and above).

Of course all that is written here is in my personal experience and in my opinion only.
After DISLAIMER you can return to the post -

How to buy a building without equity and with creative financing?
Before explaining the financing issue, you need to know a few things about HIGH LEVEL, especially in LOW INCOME areas or buildings that need improvement:

1. You must know what you are doing !!!

2. The property must be purchased at a very low price from its true value. (Of course every transaction is different. Populated, abandoned property, area, etc.)

3. These types of transactions can take a long time and can even take six months to close. Patience is a must!

4. You have to have a team you trust with your eyes closed !!! The team must include a contractor, property manager, realtor, consultants, and any professional you think of.

5. In most cases you must put EARNEST MONEY ranging from $ 5000- $ 10,000 and is NON REFUNDABLE. The "peppered" sellers will not talk to you before.
And so before you run out of money you will send your staff to see the property, do inspections, municipal testing, area testing and feasibility study.
Most sellers will give you a few days to check the property before putting it on a contract.

6. Consider the costs of appraisers and inspectors are high, several thousand good for each.

7. Putting assets on long-term contracts - I put them in at least 3 months with valuation options.
I will point out that every extension costs money unless you have excellent relationships with the realtors and the seller.

Return to the issue of the financing of the loan.
You probably think it's complicated… .. Absolutely not…. Quite simple ?
So you found a deal that met your criteria, sent your staff and got Go !!
And now you have to raise money (by the way, you can start recruiting even in the early stages before the contracts).
How do you do that, you probably ask (are you skeptical?)

So it's simpler than it looks:

1. Work with financing brokers (you can get 50% -70% off purchase and 100% on overhaul)

2. Advertising in various media about the project to obtain investors (assuming you do not have)

3. Investors - first circle (family, friends, colleagues, neighbors, all kosher).

4. Owner financing - a loan from the seller or cooperation with him.

5. Number of partners on the same deal.

6. A combination of everything I wrote up.

So how do you buy a 41-unit building in the US without equity and through creative financing?

This is our story:

We got this building through our property manager and our staff member. He got the property from his investor who lives in California and was burned out of this deal. The investor purchased the property (non-functioning and only populated by 25%)
At a cost of $ 350,000 a few years ago, his planning was to make good and passive income, but he was apparently missing something in the equation.
The investor just lost money and wanted to get rid of the property.

We have built a detailed business plan that includes everything. But everything !!! Purchase cost, renovation cost with 30% in ash Financing costs, closing costs, ARV income, expenses, future rentals and much more …….

After several weeks of negotiations, we reached an agreement on the conditions:

1. Pre-construction checks of two weeks prior to depositing EARNEST MONEY
2. Close of 90 Day with an estimate of another 45 day
3. Purchase Price $ 300,000
4. $ 10,000 deposit (EARNEST MONEY) left in the ESCROW of the Teitel company

Then the race begins… ..

And that's what it includes when all these elements coexist:

1. Marketing
2. Finding investors
3. Activation of the broker
4. Tests of the building
5. Operation of Teitel

We marketed the property in various social media,
We contacted friends, investors, family and explained the deal.
We explained that we are looking for a very limited number of investors (more specifically 2 investors)
And that the decision must be within 5 days
(Either you're inside or someone else will take your place)
And that all administration must end within 14 days (contracts, money transfers, etc.).
I think within two days we had a number of investors
(2 earned and the others had to wait patiently for another deal).
At the same time we have activated our broker to obtain financing for purchase and renovation.

The post is talking about funding

Purchase price: $ 300,000
Renovation costs: $ 500,000 (confirmation from loan lender of $ 700,000)
Property value after renovation and occupancy: $ 1,200,000 - $ 1,500,000
Financing costs: $ 13,000
Cost adjuster: $ 7,500

Funding:
70% of the purchase price - $ 210,000
100% renovation - $ 500,000 (and supplement to $ 700,000 if necessary)

recruitment:
We had to raise about $ 150,000
(In practice we raised more - you always have to leave money at the checkout).

I will reveal to you a simple fact not everything went smoothly
And we had to extend the contract and run a lot.

Landers in the US like to make life difficult for us
And always at the last minute to demand more things,
Change terms, adding fees and so on.

But as I said at the beginning, you must not give up!

Always look for and find a solution
Even if it means starting the race from scratch.
In the end, we had a clear goal
(Must also be yours)
And it is buying a building under conditions that are good for us and our investors
And there is no way we can not achieve it.
And after a few months we achieved it!
At a good time, we purchased the building!
We have created Win / Win Situation for everyone, our investors,
Us, the seller, the lender, the broker,
The property manager and all the other people involved in the deal.
It took a little longer than expected, but the main thing was that it went into effect.

So what do you say, is it possible to buy real estate without equity?

If you set a clear goal,

Be focused, persevere,

Do not give up and be creative

(Activate your creativity) I'm sure you'll succeed.

Hope I've been able to give you some inspiration and value.

Spoiler - by a similar method - of creative financing
We purchased just a week ago a complex
Of 60 units - also promising on this post.

Successfully
Jonathan

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