Creative Finance on Steroids - I bought 3 buildings - Multi-Million Dollar Creative Apartment Deal

Welcome to one of the nastiest units in this building. Now we're completely renovating these. There's part of the triple creative finance. I'm in Fredonia, Washington right now. This is part of our triple creative finance. I'm going to go through every single property in this video, but this is the 12-plex. We picked up some tired buildings on creative finance. All 3 buildings have a seller finance contract. Average interest rate is 4%. We're coming in doing the exteriors, the interiors. We're doing new floors, new appliances. We've already redone all the plumbing and electric. This is the type of stuff I love buying though. Simple little property, we're gonna absolutely deck it out. When we are done with this, it is going to be gorgeous. I'll walk you through one of the units here that's getting renovated as well. Follow me. All right, we just called this unit the Punit. This was covered in cat feces and urine. This thing reeked, it was a whole hazmat job getting this all ripped down to the studs. We're now rebuilding it, putting in new doors, New trim, new cabinets. This is a small 2-bed, uh, right on the back of the unit, but this is exactly what you're looking at. New cabinets, this is glue-down LVP. Whole building is going to be just like new. All right, welcome to one of the nastiest units in this building. Now we're completely renovating these. There's part of the triple creative finance deal. This is the newest acquisition, mixed-use 9-plex. So downstairs there's 3 retail spaces, we'll tour those in a bit. I actually see a lot of opportunity. We got this at such a great price, and we do have the budget to rent out this. We're going to strip this bad boy down to the studs. I love the layout here. It is actually very spacious. There's a huge bedroom. The building has been neglected for a long, long time. In fact, I've wanted to renovate this building for 3 years. 3 years in the negotiation to finally close it. We got seller financed. I got paid $50,000 at close to buy this. Seller financed 50%, the lender, private money lender, financed 60% of the purchase price. We got paid 10% of our purchase price at close. How awesome is that? Get paid to buy this project, which of course we should be 'cause we're spending some money here. Bedroom over here is, we'll see when we get the lights back on in here, but you have a kind of scary bedroom with a cool accent wall. We're going to see what we end up doing here on the fence and whether we encapsulate or just take off the popcorn ceilings in this place. But other than that, uh, this is actually very exciting. This is one of the deals where I get in here, I'm like, this was a slum, we're going to go deslummify this bad boy. Super excited for this project. I'll see you guys downstairs. This is a much cleaner unit in this building. However, this one's actually going to have more construction, surprisingly. So we have over here, we have this random non-conforming bedroom. That also has the bathroom off it. So we have the bathroom placed over here, so you got a master bath, and you got this bedroom with absolutely no egress. So this is a non-conforming, not exactly a legal bedroom, so it's still technically a studio. What we would ideally do, move that door there, build a bedroom there, so you walk in and come around, we'll open up this wall here, and this would be your living room. So now you have a bathroom off the living room, you have egress in the window there, open up this wall to the kitchen, and you have this nice big open space. There's a lot we could do here. We'll basically rip this down to the studs, reframe it, and go from there. Welcome to retail space number 1. This is an old bail bonds room. We're fixing the ceiling. The leaks have been addressed. The ceiling has not been addressed, so that's nasty. Uh, the rest of this, super, super simple space. We'll see if we can't salvage the wood floors, which I believe we can. They're dirty but in great condition. But this should be a pretty simple retail space. We'll figure out what the exact right use is. Any ideas? Please post below. Uh, but yeah, the room just kind of keeps going. There's office in back. There's like a random jail. Probably just keep that because it's cool. Follow me out front here. We're gonna be fixing up this building right here. I'll give you another shot from across the street here in a second. But the old AAA Bail Bonds, the historic Bell Apartments— this is going to be a fun project. We're gonna be adding 3 more retail spaces, but we need to fix them all the way up. They are tired, beat up, Ceilings have fallen in. We're gonna go to the studs on this. Very excited for this project. This is gonna be a cool one. This is the biggest one, the central retail space. I have no idea what I want it to be yet, so I always appreciate ideas. We have some areas here that still have some of the classic exposed brick. Drop ceiling is mostly, well, dropped, but we'll be, uh, we'll be fixing that. What I liked about that piece is I can actually look up and into the plumbing. That helped me with due diligence. If you guys look up there, I'll see if you can see it with me too. There's a lot of PEX plumbing, so that's that plastic black plumbing that runs through there. There's a little bit of old galvanized steel piping, so you want to get rid of that as part of our project originally quoted. But what I liked about this building is a lot of the old stuff has already been replaced. That's actually what I want to see on these buildings. So we're going to keep this space pretty simple. I don't know what we want to do with it. I've heard all sorts of different ideas— tattoo parlors, turn it into a laundromat, maybe a cosmetic salon. It's pretty deep. I don't know how well you can tell from here, but this thing goes back a ways. This is a large space. So I appreciate your guys' ideas on this, but yeah, this building, we bought this for $600,000. There are no payments, none whatsoever, on the mortgage for the first 6 months, which is hugely helpful in getting through the renovation of the project. So $600,000, 9 units downtown. Yeah, we have a lot of reno, but I think we're going to get this thing done for under $225,000. It seems like a lot, but so much of this is basic. I think we're gonna knock this out and make a killing on this building. Fully stabilized in this area, this building would be worth about $1.2 million. So we're about half price. We're gonna see how much money we can squeeze out of it. This is Lily. This is a 5-plex. We have a barber shop below, currently leased. We love him, Jordan's Barbershop. I've been a tenant of mine for a while. This one we acquired into the LLC with the new partners. But look at this unit. This one, we're completely gutting, so floors will be new, windows will be new, kitchen will be new. I have contractors quoting stuff right now, so ignore some of the, uh, the humans in here. But look at the size of the actual building. That's City Hall right outside the window. So I say we're downtown. We're downtown. You got a walk-in pantry back there that my wife is working on. Follow me this way. Bedroom number 1 with the vanity closet combo. Swing over to the bathroom. Obviously replacing this tub, it is nasty. This is from probably 1972. Placing the ceiling fan. Everything here is dated, so this will be ripped out all the way down to the floor. Walls are fine, so we can keep those. That's kind of cool accent pieces here. And there's one little bonus bedroom in the back. It's legally a bedroom. You don't have to have a closet in bedrooms in Washington state. Offered to legally be a bedroom. You do have to have egress. The window is, I think, probably the minimum size, uh, but I believe this is a legal conforming bedroom, barely. They share the big master bathroom here, but this is what you're looking at. This is probably, best guess, 1,600 square feet. Get this one done and this building's completed. This is a project that's almost done. So there's the triple seller finance deal. Now the most important part: what do the numbers actually look like on a project like this? Well, we bought the 12 for $1.1 million. 10% down, so we put $110,000 down on that. The 5-unit we bought for $400,000, also 10% down, so we put another $40,000 down. Pretty close to free real estate. The 9-plex, the really dirty building there with the mixed-use retail, we bought for $600,000. We bought it 110% financed, so we actually got positive $50,000 at close. So we did negative $50K down for a grand total of $100,000 down in the acquisition here on a $2 million total purchase price. And we're injecting about $350,000 to get these where they need to go. We're gonna re-gravel one of the parking lots, we're painting the exterior, we're fixing all the units, we're doing the interiors, some electric, some plumbing, we're adding a laundry room, and we're renovating all those buildings that you saw us do. Everything that we walked through there, those are the renovation projects. With all of that done, we're gonna be spending about $350,000. We brought that in with the partners who bought into this LLC with us, so that capital is all capital from the partners, myself included, into the deal. So we're all in, down payment plus renovation, $450,000. We owe $2 million of debt on this. The notes are at 4% or 4.5%. There's a right in between there, so I have a blended rate of, it's about 4.3% interest on the entire thing. Now fully stabilized, we have a net operating income between the 3 properties that will be probably right around, if market rates don't increase, which they probably will, but conservatively, $237,000 per year. That factors for a 5% vacancy. That's once we get the retail lease. That will take a little bit of time, but after about a year here, we should be looking at about $237,000 of net operating income. On a 7-cap, That's $3.4 million of real estate. On a 6-cap, that's $4 million. We owe $2, but we only spent $450,000 on the deal. So the goal is to turn the $450,000 into $1.5 to $2 million of total equity in the deal. 3 partners, each of us own 33.33% of the real estate. That is a lot of money for everyone. That's why we're doing this fun renovation project.