Posted By: Sean Terry | February 13, 2009
We are Done and Ready to Sell to an Investor!!
We have been done with this renovation for about a week now and we have a tenant lined up to move in this weekend. The total cost of the renovation was just under $10,000 which is about $2,000 under budget. From acquisition to completion the renovation took roughly 9 working days. This is a great 4 bed 2 bath 1700+ square foot house located in the heart of Phoenix.
Our company Fortress Investments will sell this property to a qualified investor for $3,500 total out of pocket, leaving $37,500 of guaranteed equity. We are one of the only real estate investment firms in the nation that has a program like this.
Let Me Explain
We purchase distressed properties like this one on 2521 E Brill and then renovated it and line up a tenant for 12 months. We sell the property to an investor in this example for $3,500 total out of pocket. This process is done using a 2 step closing.
1st Step Closing:
Fortress Investments sells the property to a qualified investor for $3,500 down and $112,500 of no interest, short term seller financing. The property is worth roughly $150,000, so the purchase price is just under 78% of the value. Now that the investor is on deed to the property they proceed to the 2 Step Closing. Remember we cover all closing cost associated with this transaction.
2nd Step Closing:
The investor works with one of our preferred lenders and does a “Rate and Term Refinance” on the property at 75% of the banks appraisal. We again cover all closing costs associated with this transaction.
The investor owns a renovated, cash flow property with $37,500 of guaranteed equity. We refer a property management firm that will manage the property for $75/mo if the investor is out of state.
The 2 questions we get all the time is:
1. “What if the appraisal comes in lower, what happens?” Let’s say the appraisal comes in at $140,000 instead of $150,000, we will adjust our seller financing payoff statement to $105,000 which is 75% of $140,000. We can be flexible and the investor is guaranteed 25% equity.
2. “How can you do these types of deals?” We have to buy these properties at 50% of appraisal to be able to deliver them to investors at 75% of appraisal. We do this by paying all cash, closing quick with little or no inspection period taking the property in “as is” condition.
You can read more about this property and watch a virtual tour by clicking here: Fortress Investor
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