I Bought a 10 Unit Apartment for $16,000!!!

We mainly fix and flip homes, but when you can buy an apartment for $16,000 you pretty much have to do it. Find out how we did it!

My sales team was cold calling sellers for single family homes. This seller said they didn’t want to sell their home but had a 10 unit apartment that they were interested in selling. At the time we had never bought an apartment. We let them know we were interested anyways.

We didn’t know how to work the deal. We didn’t know what it was worth. We thought that we could figure it out along the way. There are too many people that are scared of the unknown. You have to experience new things to learn!

The seller said they hadn’t received rent in over three years. They had no idea of the condition. It’s in a rough part of town. They were willing to part with it for $400,000. I let them know that we would look into it and get back to them.

We drove down and checked it out. It was even worse than expected. People were selling drugs, guns, and anything you could think of. On top of that one of the units was burnt down. We reported our findings back to the seller and he was very upset.

We still didn’t know what exactly it was worth because there weren’t many 10 unit sales. We did see one that sold for 700k so that was all we had to go off of. We offered him 200k for the property. We knew it would be a headache to evict everyone and we had no idea how much the repairs would be.

He wasn’t willing to take 200k. Eventually we came to an agreement of seller financing. We would pay him $16,000 as a down payment. This would pay off all his back due taxes. He would then hold a note for 300k on the property. The first three years of that note, we wouldn’t have to make any payments. The next seven years we would have interest only payments of only $1250 a month.

We ended up buying the building at those terms. After six months we finally evicted everyone and got in the units. Thankfully they weren’t as bad as we thought.

We spent about 200k to fix everything up and now they are rented for about $7000 a month. We will get that cash flow for three years with no payments. Then we will only have to pay $1250 a month after that. On top of that, the apartment is now worth around $1,000,000.

It’s been our best deal to date in both cashflow and profit whenever we do sell. And it's all because of creative financing. I wouldn’t have bought the apartment without that even at 300k. I just didn’t know enough about the apartment’s value and I didn’t want to get a traditional loan.

Thankfully the seller was willing to do the deal this way! Now we have a great asset that cashflows and has 700k of equity in it.

To see the video on giving the missionaries a home click here:

https://www.youtube.com/watch?v=NTNqRyF6PXs

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