Case Study - Creative Financing Seals a Difficult Deal
Property Type - Apartment
CHALLENGE
In December 2021, Realtor Cassie Wells' clients made a bold move - purchasing four triplexes and a 16-unit multifamily property from a single owner. They spent all of 2022 completely renovating these properties. By December 2022. they were eager to list these newly refurbished units for sale.
However, they faced some difficult challenges. Interest rates had risen significantly, almost doubling from the previous year. Moreover, the 16-unit property was in a precarious situation, with only 30% occupancy due to poor property management.
ACTION
Given the recent renovations on the properties, Cassie knew that getting top dollar for these units was crucial. To maximize her clients' profits, Cassie advised her clients to sell each property separately.
The triplexes were relatively easy to sell, and most of the buyers intended to reside in the units. In fact, one of the triplexes was purchased with the intention of running it as an Airbnb.
On the other hand, the 16-unit complex proved to be a tougher sell due to its lower occupancy rate. The clients received a few offers, but none met their desire price. Rising interest rates, which had climbed to more than 7% in 2023, further complicated matters.
An unexpected twist - in every sense of the word - occurred when a tornado swept through the area in March, leading to an increased demand for rentals. Consequently, the property manager successfully leased 10 of the previously vacant units, making the property much more attractive to potential buyers.
RESULT
Cassie's clients eventually received an offer for the 16-unit complex. After some counter-offers, the clients ultimately decided to take a creative approach to closing the deal, agreeing to a $100,000 second mortgage at 0% interest, with a five-year term. This enabled the buyer to make a more acceptable offer. The buyer now has five years to build income before having to refinance and pay off the second mortgage.
Looking for a hardworking, trusted agent to sell your property? Connect with Cassie Wells!
501.993.1973 | cassie@cassiewells.com | cassiewells.com
What Does a Commercial Realtor Do?
