Thursday, April 21, 2011

Transaction #15 of 52 in 2011- Duplex Contract Sale

Sometimes we sell properties on contract to people who want to own a home but cannot get credit from a bank. We sell it to them and then give them 2-4 years to get their credit put into shape and re-finance with traditional financing.

For this transaction, we sold a great duplex on contract to a couple new to real estate investing but have no cash or real estate investing experience. What they do have is GREAT credit. So we sold them the property with the agreement that they will take out immediate financing from a local credit union that will do a 50% LTV (loan to value) home equity line of credit (HELOC.) We will carry-back the balance of the sale price as a note.

Since the buyer has no property management experience we brought in The Equity Growth Group, a property management company that has experience with multi-family properties. They will master lease the property and sub-lease it to tenants.

This is a real win-win-win. Clear Day Capital gets a full price sale that gets us cashed out and leaves us with a note that gives us monthly income. The new investor couple gets monthly cash flow, property value growth, amortization of their loan, and deprecation tax benefits. The Equity Growth Groups receives the joy (and compensation) of management.

This type of a transaction really works great for a new real estate investors who have good credit. It protects them from a lot of the pitfalls of finding, rehabilitating, and managing the property. It gives them two experienced real estate investment companies to work with and learn from.

Are you a new investor or thinking about investing? Do you want to learn and reduce your risk? Then give me a call at 801.510.3566 and we'll talk some more about this transaction and what you want to accomplish with real estate investing.

No comments:

Post a Comment