Financing and partnerships
Inside a $900,000 Seller Financed Renovation in Downtown Ephrata
A behind-the-scenes walkthrough of a $900,000 seller financed mixed-use building: structural surprises, three tiers of renovation, and the finished units.
I bought this building for $900,000. All three retail spaces were hideous. There were leaks, floods, missing floors, walls falling apart, and a tree actively destroying one of the exterior walls. There were also about twenty people who had already stopped by to ask when the space would be available to lease.
That's the honest version of a creative finance deal in progress. Not the after photos, not the spreadsheet: the middle part, where you're stepping around nails in the floor and trying not to fall through it. This is the behind-the-scenes walkthrough of the triple seller financed deal in downtown Ephrata, Washington, and I want to show you what the work actually looks like, how I decide what to fix first, and how these buildings got bought with no money down and no banks involved.
Related reading: 3 Buildings, $2M, $100K Down: My Triple Seller Finance Deal
The Structural Problem in the Back
The back of this building is our biggest concern. There's nothing above it, so I'm not as worried about the structural side: it's just a closet off the back of the building. But there's a tree that is destroying the wall, and that wall starts four feet underground.
So this one is going to be structural work. We'll get the tree removed, get the wall pushed back out, and there are going to be excavators and the whole nine yards. It's going to be unfortunately expensive. The important word there is unfortunately, not unexpectedly: it was part of our originally projected budget.
That distinction is the whole game in a renovation project. A surprise you budgeted for is a line item. A surprise you didn't budget for is a problem. When we underwrote this deal, we assumed the back of the building was going to cost real money, and it is.
Inside, we haven't started flooring in the big retail space yet, but we're just about to. If you saw this originally, the place was absolutely trashed. Now it's a big, clean retail space, and the demand is already there. Bakeries, laundromats, and similar businesses keep asking when the space comes available because they want to lease it. This is core downtown. That's why.
Buying the Whole Block
This is one of two mixed-use buildings I own here. I also own the building right next door, so we're buying the entire block and revitalizing downtown Ephrata, Washington: one of my favorite areas.
You're right on the main street. This is where all the fun happens in small town America, and the best coffee shop in town is right over there.
During my visit, my original business partner Cody Davis happened to be crossing the street. He used to own this building. Now he has properties down the street, while I own this side. Neither of us was pursuing the hotel next door.
Cody's building across the street is a nine-plex: I called it a five-plex first, and got corrected, which is what happens when you have too many things to track. His mix is a bunch of one-bedrooms, some two-bedrooms, and a three-bed, two-and-a-half bath. That's not a bad mix at all.
That's what downtown revitalization looks like in practice. It isn't one hero building. It's two investors who know each other buying up a main street one property at a time and slowly changing what the street is.
My Three Tiers of Renovation
Here's how I run almost every project. I put work into three tiers:
- Stuff we can quickly turn and get online
- Medium renovation: needs work, but we can get it live
- The huge freaking projects
The worst retail space in this building falls squarely in tier three. We're going to get the other two online first, get every other unit done, and come back to that one last.
Inside the unit, the problems were substantial: weak sections of floor, exposed nails, an electrical box that needed attention, flood damage, and mold in the walls. The active leak had been fixed the day I visited, but the bucket below it and the remaining damage showed how much work was still ahead. This was a renovation to inspect and budget carefully.
This will be the most expensive unit in the building. When our investors first walked through it, they were pretty nervous about it. But the way the other units are coming out, even if that space never came online, we still make a ton of money. That's the safety margin you want built into a value-add deal: the worst unit in the building is upside, not survival.
The order inside a single unit follows the same logic. Renovation projects 101: start with safety, switch to habitability, then get the aesthetic. It will look beautiful at some point. It has to be safe and livable first.
The Units Coming Online
Upstairs, the units are coming online faster than I imagined they could. New flooring is in. The bathroom is coming in. The unit that was absolutely destroyed upstairs is big, and it's awesome. Same paint, same floors, same model as the twelve-plex, but a way cooler layout, with windows that look right out over downtown and the green silos.
One of the ground-floor rooms used to be an old bail bonds room. Nasty. That's gone.
Another unit we're just starting has a funky layout. The countertops are getting ready to go in, the new fridge is in, and we put a new heater in the wall. Those wall heaters are so inexpensive and they're really functional. I've loved them: I put them in all of our hotel conversions.
The bedroom in that unit is the weirdest thing I've ever seen. There's a random window into the bedroom, and it's an illegal bedroom because there's no egress, so it's still technically a studio. If it's going to be a studio either way, and the wall is obviously not load-bearing with no studs running through it, I want to take the whole thing out and just open up the space. It's going to look a hundred times better.
We also had a move-out I hadn't seen yet. Lots of dogs: I could smell it from outside and expected the worst. It was gross, but cleaning gross is not hard. No major damage. Flooring to redo, walls to repaint, some electrical. The kitchen gets ripped out entirely; there's no point trying to salvage it. I hate the galley style where you have no space, so we'll do an L in the back and move the stove over. Much more functional kitchen.
The Finished Unit
Then there's the one that's done, and this is one of my favorite renovations we've ever completed.
The place is absolutely huge: a little over 2,000 square feet. New floors, new windows, new blinds. In the kitchen we had this ugly stone veneer and ended up being able to paint over it. I wasn't sure how it would turn out and I actually kind of love it; it has a really cool texture. Countertops are the standard high-end LVP we like to do. We redid the pantry and salvaged the countertops in there.
The contractors did my least favorite thing, though: white fridge, white microwave, stainless steel stove. Just make these things match. That's the attention to detail that matters. Everything else in here, I'm really happy with, and since they're all nice we won't replace them: it is what it is.
We replaced the front doors and painted them gray, which isn't something I usually do. We decided to try something new and see how we liked it. The master bedroom has a full vanity countertop situation right off it. We were going to skip the bathroom renovation and salvage the old tub, but it was a giant odd-colored tub from around the 1960s, so we made the decision to just replace it. Now there's a nice, standard shower setup with countertops that match the kitchen and soft-close everywhere: my favorite.
In the final bedroom, which is small and oddly placed off the master, I found something I'm really glad they didn't rip out: an old thermostat with an actual mercury thermometer and a dial on the bottom for temperature. It isn't hooked up to anything anymore. We switched this unit to electric baseboard heating, so there's brand new heating wired in. But I want to take that thermostat off the wall and put it in my own house.
This is part of our affordable project: downtown, right across from city hall. When we talk about entry-level housing, this is what I'm talking about. It's one of the nicer units in our Ephrata portfolio and a great standard for how we're going to do the rest of the renovations in this building.
Key Takeaways
- Budget for the ugly part. The structural work behind this building is expensive, but it was in the original projection, which turns a crisis into a line item.
- Run projects in three tiers: quick turns, medium renovations, and the huge projects. Get the easy income online first and save the monster for last.
- Inside a unit, go safety, then habitability, then aesthetics. In that order, every time.
- Underwrite so the worst unit is upside. Even if that trashed retail space never came online, this deal still makes a ton of money.
- Details compound. Matching appliances, soft-close hardware, and a coat of paint over ugly stone veneer are cheap relative to what they do for the finished product.
- Owning a cluster of buildings on one street changes the street. Between my side and Cody's, downtown Ephrata is getting rebuilt one building at a time.
By the way, all of these are seller financed, which means I didn't actually put any money down on them and there were no banks involved.
Watch the full video for the walkthrough: the tree wall, the hazard unit, the surprise Cody Davis appearance, and the finished 2,000-square-foot renovation. If you want to buy properties like this, nice units for great people, and make a profit doing it, our free Skool community is open and includes a free deal calculator. There's also a free course on getting started in multifamily investing, and if you want to go deeper, you can learn about my mentorship through the link in original episode description.
Read the episode transcript
0:00 in the retail spaces. I bought this 0:01 building for $900,000. All three retail 0:03 spaces were hideous. In fact, the back 0:05 of this is our biggest concern. There's 0:07 nothing above this, so I'm not as 0:09 worried about the structural. This is 0:10 just a closet off the back of the 0:11 building. There's a tree that is 0:14 destroying 0:15 this wall here. Uh we're going to and 0:18 this wall starts 4 ft underground. This 0:20 will be some structural. Uh we'll get 0:22 that tree removed, of course. Get the 0:23 wall pushed back out. There's going to 0:25 be esavators and the whole 9 yards. It's 0:27 going to be unfortunately expensive, but 0:29 part of our originally projected budget. 0:31 Uh we haven't started flooring in here, 0:32 but we're just about to. But if you guys 0:35 saw this originally, this place was just 0:36 absolutely trashed. Big retail space. 0:39 We've apparently had almost 20 people 0:41 come by and ask when this is going to be 0:43 available so we can start leasing. So, 0:45 we're getting businesses like bakeries, 0:47 laundry mats, and the like are all 0:50 asking like, "Hey, when's the space come 0:51 available?" Because we want to lease it. 0:52 Uh this is core downtown. I'll actually 0:54 show you guys where we're at. Uh, but 0:56 it's about the coolest thing in the 0:57 world. So, this is one of two mixeduse 0:59 buildings. I also own the building next 1:00 door right there. Uh, so we're buying 1:02 the entire block revitalizing downtown 1:05 Ephra, Washington. Uh, but one of my 1:07 favorite areas. So, you're right here on 1:08 the main street. This is where all the 1:10 all the fun happens in small town 1:12 America. Uh, the best coffee shop right 1:15 over there. Speaking of surprised 1:18 guests, it looks like Cody Davis, my 1:20 original business partner, is crossing 1:22 the street. This is an unscripted wild 1:24 sighting of the one and only Cody Davis. 1:27 Hello. 1:28 Hello. We're shooting YouTube. Cody, 1:29 welcome to the channel. 1:30 Hi. 1:31 That you used to own. 1:32 Yeah, 1:32 we're here. 1:34 Hi, property neighbors. Hi everyone. 1:36 Right over there. 1:37 There we go. Cody has down the street. I 1:39 have this side of the street. Neither of 1:41 us are buying the next door hotel cuz 1:42 it's absolutely garbage. Uh but we're 1:45 revitalizing downtown. This is my 1:47 project. The the one right across the 1:48 street's your fiveplex. 1:50 Nine flex. Nine. Oh, the nine. You have 1:52 too many things to track, dude. 1:54 Something like that. 1:55 So, you got a nine. We got the nine 1:56 here. What is the uh what is the mix of 1:58 your nine? 1:59 I've got a bunch of one beds. I got some 2:02 two beds and a three bed, two and a half 2:05 bath. 2:07 That's not bad. 2:08 Not half bad. 2:10 There we go. Downtown Afraid of 2:11 Washington. 2:15 Welcome to the bell. 2:18 Run you guys through this unit really 2:19 quick. Here's the flooring we're putting 2:21 in 2:22 all across all these units. But they are 2:24 about to come online here faster. Uh 2:26 faster than I imagined that they could. 2:28 This is better than it used to be. 2:29 Yes. Uh a lot better. Uh there was 2:32 leaks, floods, missing floors, walls 2:35 falling apart. This was an old bale bond 2:38 room. Nasty. Let's pop upstairs. 2:46 Still a construction zone here. If you 2:48 guys are like, "What the heck is going 2:49 on here?" Yeah, look at that nastiness. 2:52 Gross. 2:54 But we're getting the retail done 2:55 downstairs, the upstairs. Getting all 2:58 rent ready. 3:02 Going to be redoing all these floorings. 3:04 Painting the walls. 3:06 Coming in. Here's what we're working on 3:07 upstairs. 3:10 Hey, how you going? 3:11 New flooring's in. 3:14 Bathroom's coming in. This was the 3:16 absolutely destroyed unit upstairs. It's 3:19 big. 3:21 It's awesome. 3:23 When I was talking earlier back at the 3:25 12plex, same paint, same floors, same 3:28 model. This one will look almost just 3:30 like that, but way cooler layout. You 3:33 can come on in. These windows will be 3:35 replaced. You can look right out over 3:37 the street there 3:39 into downtown out of the green silos. 3:43 Our extra cabinets and holes in the wall 3:46 have already been patched. You actually 3:48 are ending up with a pretty cool large 3:50 space upstairs. This is right above that 3:52 retail we were just at. 3:55 There you go. 3:56 Thank you. 4:00 Renault projects 101. 4:03 Start with safety. Switch to 4:05 habitability. Then get the aesthetic. 4:08 This will look beautiful at some point. 4:12 And we're in the only unit that we're 4:13 not doing yet. I'm assuming 4:16 this one is a bit of a hazard. I've been 4:18 warned to watch where I am filming 4:19 because there are multiple places I may 4:21 fall through the floor. Uh so we're 4:23 going to try to be careful here. Uh 4:25 here's the major major stuff we're 4:26 working on. There is a electric box 4:28 behind me. I'm not going to film it too 4:29 closely. Right there. Uh because there's 4:32 some things wrong with it and I don't 4:33 want anyone coming back to me saying, 4:35 "Oh, wait a second. Uh we got to inspect 4:37 this. I'm going to get it fixed, but I 4:39 just want to make sure I get to do it 4:40 all on my terms. Uh, there's a spot I 4:43 don't want to fall through. This is the 4:46 worst of the retail space. We're going 4:47 to get the other two online first, get 4:48 every other unit done. And this is how I 4:50 do most my projects. I put three tiers 4:52 of project. I go, "Hey, we can quickly 4:54 get this turned in online. Hey, we have 4:56 medium renovation. We got to get this 4:57 worked on. We can get this live. And we 4:58 have stuff that this is a huge freaking 5:00 project." Well, this here is a huge 5:03 freaking project. Uh, actually, there's 5:05 some nails sticking out of the floor 5:06 here. So, I'm stepping gingerly. But we 5:08 have a completely beat up unit. Uh 5:12 there's places where this is flooded. In 5:14 fact, the active flood was fixed today. 5:17 Uh there's the uh there's our flood 5:19 bucket down below. And uh that's where 5:23 the water was coming from. You still got 5:25 mold in the walls over here. The whole 5:26 thing is just kind of a disaster. This 5:29 will be the most expensive one. When our 5:31 investors first walked through, they 5:32 were pretty darn nervous about this. But 5:35 the way the other ones are coming out, 5:36 even if this space never came online, we 5:38 still make a ton of money. Uh, we'll get 5:39 this one renovated after everything else 5:41 is online leased. Ready to rock. By the 5:43 way, these are all seller finance, which 5:45 means I didn't actually put any money 5:46 down on these, and there were no banks 5:48 involved. If you also want to buy 5:50 properties like this, nice units for 5:52 great people, and make a profit doing 5:53 so. We have a free school community. The 5:56 link is below. You can join that and get 5:58 connected with thousands of other 5:59 investors, buy your first deal 6:01 completely for free. The education's 6:03 free. community is free is there for 6:05 you. You'll even include a free 6:06 calculator for you. Click the link 6:07 below. Join the school community. I'll 6:08 see you there. Got one more unit 6:10 available. Uh we are just starting the 6:12 reno on this one. This one has a funky 6:14 layout. Well, the other one looks just 6:15 absolutely beautiful. Countertops are 6:17 getting ready to go in here. So, we have 6:18 these old beat up ones. 6:21 We're fixing that, but got new fridge 6:22 in. Appliances are getting updated. Uh 6:25 we got a new heater in the wall there, 6:27 which these units are so inexpensive and 6:29 they're really functional. I've loved 6:31 those. those. I put those in all of our 6:32 hotel conversions. 6:35 Come into the bedroom. This is the 6:36 weirdest thing I've ever seen. I don't 6:39 know why there's a random window to the 6:41 kind of bedroom. This is an illegal 6:43 bedroom. There's no egress. Uh so this 6:45 is still technically a studio. If it's 6:48 going to be a studio either way, this is 6:50 obviously not a loadbearing wall. 6:52 There's no studs going through it. As 6:53 you can see, I want to take this whole 6:55 thing out. Just open up the space. It's 6:57 going to look a hundred times better. 7:00 All 7:03 right, we had a move out. My team just 7:05 came in. I haven't gotten into this unit 7:06 yet. Just got a bunch of dogs. I can 7:08 smell the pee from out here. So, I'm 7:09 expecting this to be very bad. Let's 7:11 check it out. 7:13 All right. Oo, it is uh it is stinky. 7:16 That bathroom. I can hear water running. 7:18 That's looking a little gross, but it's 7:20 actually not as bad as I thought it 7:21 would be. Let's take a look. 7:27 All right, that's what we got. His bed 7:29 was over there. 7:31 Uh, this is not as bad as I thought it 7:33 would be. I mean, it it is gross, but 7:35 cleaning gross is not hard. I'm not 7:36 seeing a whole lot of major damage. I'm 7:38 seeing a lot of flooring that needs to 7:40 be redone, walls that need to be 7:41 repainted, uh, some electrical 7:44 kitchen. We just rip these things out. 7:46 There's no point in trying to salvage 7:47 them. Um, I hate this galley style thing 7:50 where you have like no space. I think we 7:51 do an L in the back. So, it goes around 7:54 like that. Move the stove over here. 7:58 And this will just be a much more 7:59 functional kitchen. But okay, I was 8:00 expecting this to be terrible. This was 8:02 way less dramatic. I apologize, YouTube. 8:03 We'll do better next time. This is 8:05 exciting. I shared this space about to 8:06 be rented in our last video here for the 8:08 triple creative finance deal. This is 8:10 what it turned out like. We just got it 8:12 finished. The new floors are in. This 8:14 place is absolutely huge. Got new 8:17 windows, new blinds, the kitchen. Check 8:20 out this Rena. I love this. So, we had 8:22 this ugly stone veneer stuff. We ended 8:25 up being able to paint over it. I wasn't 8:26 sure how it would turn out. I actually 8:28 kind of love it. It has a really cool 8:30 texture here. Countertops. We went with 8:32 the standard high-end LVP countertops we 8:35 like to do. Contractors did my least 8:37 favorite thing. We got a white fridge. 8:39 We got a white microwave. Stainless 8:41 steel stove. Guys, just make these 8:43 things match. That's the attention to 8:45 detail that matters. Everything else in 8:47 here really happy with though. We're not 8:49 gonna, you know, they're all nice. We 8:50 won't replace them, but is what it is. 8:52 Uh, redid the pantry. So, got this done. 8:55 We're able to salvage the countertops in 8:56 here. We got a full pantry. This is part 8:58 of our affordable project. So, downtown 9:00 right across city hall. We talk about 9:02 entry level housing. This is what I'm 9:04 talking about. Cruise in. Replace front 9:07 doors. Painted the doors gray, which is 9:09 not something I usually do. We just 9:10 decided to try something new. See how we 9:11 liked it. Master bedroom right here. has 9:15 full vanity countertop situation right 9:19 here off the master. Uh we were going to 9:23 not do the bathroom rena. Uh we're going 9:25 to try to salvage the old tub. It's from 9:27 the like 1960s. It's this giant odd 9:30 colored tub. Uh made the decision to 9:32 just go ahead and replace. So we have 9:35 really a nice but standard setup here 9:37 for the shower 9:39 countertops. This all matches the 9:41 kitchen. All soft clothes. 9:44 My favorite. 9:46 Kept this cool texture here on the wall. 9:49 And I found something. I'm really glad 9:50 they didn't rip this out. This is super 9:51 cool. So, we're in the final bedroom. 9:53 It's right here off the bathroom. Kind 9:54 of weird. You have to go to the master 9:55 to get to the final bedroom. It is a 9:57 legal bedroom. It is also super small. 10:00 Check this thing out. 10:03 I can get this in here. This is a 10:05 thermostat. Look at that. You have an 10:07 actual like mercury thermometer. And you 10:10 have this dial on the bottom 10:13 for temperature. Now, this isn't hooked 10:14 up to anything anymore. This is a This 10:16 is a dead thing. But dude, I want to 10:18 take this off and put this in my house. 10:19 This is a cool old piece of hardware. We 10:22 switched to electric baseboard heating 10:24 in this one. Uh so we have brand new 10:26 heating wired in down there, good to go. 10:28 But this is one of my favorite rens. 10:30 This place is absolutely huge. It's uh 10:32 about a little over 2,000 ft. Uh it's 10:35 one of the nicer units in our portfolio 10:37 here in Afraida and a great standard for 10:40 how we're going to do the rest of the 10:41 renovations in this building.
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