$85,000 Equity in Two "Nothing Down" Duplexes

My wife, Deb, (who has sold reaL estate for over 15 years) and I have had so many "light bulb" moments over that past six months reading Creonline.com and RichDad.com that we just about can't stand it... but we'll try. Here's our latest "deal." Deb wakes up; Makes a small pot of coffee; Turns on the computer; Pours a cup of coffee; Searches the MLS for the newest listings in multi-family housing. This is her daily routine. One catches her eye. A duplex. Both units are two bedrooms, one bath. Asking $79k in Tacoma, WA. Later that day, Deb makes her way out to see this property. It's not bad! It does need some cosmetic work done to it. It sits among seven other duplexes that all look the same. Some are being renovated. She notices four other real estate agents' cards on the kitchen counter after only six hours on the open market. She calls the listing agent for more info. Gets the needed info and is told there are three offers coming in. Deb writes up the offer for us. She offers $80k All cash, Close in 30 days. Now, first of all, we don't have $80k just sitting around in the bank. But we do have a Home Equity Line of Credit. We beat out the other offers. Yippie! Now, while this property is in escrow, we contact our lender. We ask him to start a refinance on this duplex. It appraises for $115k. We end up with a loan for $84k. The refi closes two weeks after we take possession of the duplex. What we now have is a duplex for no money out of our pocket! We got the $80k back plus closing costs. We actually ended up with a check for $218. for buying this duplex for all cash, then turning around and refinancing it! It get's better... Turns out the seven other duplexes are all owned by an investment corporation. It was a hard money foreclosure. These investors didn't want to be property managers, so they were fixing them up to sell. Deb gets to the bottom of who owns them and who is the contact for making an offer on the rest of them. She takes the "contact" to lunch to find out the bottom line. Tells him she wants them all and ties them up. The bottom line price for all the rest, fixed up, is $100k for each duplex. She now goes to all of her investors and friends and lets them know of these fixed-up duplexes. They should appraise for around $125k no problem. The price to them is $105k. One investor wants four of them. The rest are all spoken for, with a waiting list. We'll take one of those for ourselves. We did want two, but gave one to another investor. She lets them know that she is charging the $5k for putting it all together. Deb now goes back to the investment corporation and says that instead of taking a commission for the sale, she wants our duplex for $70k. The $5k added on to each duplex for Deb's time, talent, and persistence will go towards lowering our unit's price. We end up with two duplexes. One for $80k and one for $70k. They appraise for $115k and $125k respectfully. We're happy. The investors are happy for buying under market value and, since we all know each other, we plan on upgrading the complex together to better the neighborhood and our investments. Not too shabby for a few weeks of work! Scott Townsend [Return to Menu]