Mr. Pity purchased the property a few years ago after flipping a few properties and having some money
to invest. The market was not as hot as it is now, but they had a few agents who knew the type of
properties they liked to invest in, and one of them passed this deal to them. At first glance, he did not
think much of it because it was more expensive than the range of $200,000 to $400,000 they were used
to. The property was on the market for $600,000 and was in good condition, but about 80% vacant.
However, the seller was very motivated to sell because the property management company had taken
advantage of him, and he wanted out as fast as possible. Mr. Pity made an offer on the property with a
contingency on the seller providing financing a second mortgage of $150,000, which surprisingly the
seller took. They found a first mortgage that was willing to come in and give them financing. They did
75% first mortgage and put about $20,000 or less into the deal just to close it, based on land transfer tax
closing fees.
After closing the deal, they did not do too much because they did not have a lot of cash reserves for the
property. They filled up the properties before even closing, which was great because they started cash
flowing the day of closing. The property cash flowed very well, and they made anywhere from $15,000
to $20,000 in about 12 to 18 months.
After just under two years, they refinanced it, pulled more money out, did a little bit more renovations,
and were actually going to hold it long-term. However, they received an offer from another realtor who
loved the property and location. At the time, they offered $850,000, which was their selling price. The
deal propelled them to expand very rapidly. Although some people say never to sell, Mr. Pity was still
happy with the decision they made.
The key takeaways from this real estate deal are to be creative with finances and look for motivated
sellers. Sometimes a seller may want out of a deal and be willing to finance a portion of it, which can
help buyers who do not have a lot of cash reserves. Additionally, it is important to invest in good
locations and properties in good condition. Filling up a property before closing and starting cash flow
immediately is also an excellent way to start generating income from the property. Finally, when
receiving an offer that can help propel an investor's business, it may be wise to consider taking it, even if
it means selling the property earlier than intended.
