My partner Mark and I (I call him legs, he’s the young one and does all the running around) have been very active this past year. On January 1st, 1998 we had one three-unit apartment house and two tenants.
On January 1st, 1999 we controlled 95 rental units, either owned or managed by us, some single-family but most multi-family, with 75 tenants. Most of the empty units are either houses we just got in December or part of the 35-unit complex we took over on January 1st.
The 35-unit is a challenge but has enormous potential. We took it over on a master lease and intend to finance it when we get the tenancy turned around. Since we borrowed the money for the master lease, we haven’t got any of our own money in the deal.
Perhaps the best news of the new year is that we now have investors coming to us looking to do deals. One has already funded his first house and wants to do 30 or 40 this year. It’s a powerful sword to wield when I offer “all cash” for a property and can close within a week.
We are now in the process of refinancing the house, paying the investor back and cashing out about $8,000 for ourselves, then selling the property on a. We get paid up front from the refi and the non-refundable option money, make about $150/month, or so, in rent differential during the lease term and then profit from the sale if our buyer exercises his option.
The best part is we are adhering to the “Terry Vaughan Principal” of using OPM (other people’s money) because we haven’t got any of our own money in the deal. I like the story he tells at his seminars about one of his investors who could personally fund about any deal but always asks the question, “Where are we going to get the money?” I always try to do the same.
My partner is about ready to quit his job and go full time doing our thing, and I guess I’ll have to think about that too. We’ve already got a full-time assistant keeping our paperwork straight and a good crew of rehab guys to do whatever. We are about to move into our renovated offices, probably within a week or so.
As I write this, we are also actively looking for a hardware store to purchase (with apartments above to cover the overhead of the building), so we can save on the rehab costs for appliances and all the “whatnots” that go into it, and maybe a small gas station with a garage bay to do our vehicle maintenance and get cheap fuel.
My partner already has a landscaping business and intends to reactivate it in the spring. All in all we’re trying to cover the bases.