6 Unit Building
I have found a 6 unit building that has come on the market. At this time I do not have the money for the downpayment suspect 30%.
We currently have a 18 units across 5 properties.
The building does not need any major improvements so it would be hard to do hard money and make repairs then refi.
Any other ideas?
Robert
Robert if you have equity in another property that you can tap through an equity line that could be a source of funds. then if the seller will hold paper or take a mortgage for the balance
Thanks for the creative ideas.
I have located a mortgage guy who can do 10% down on a commercial prop. I am also going to pursue a owner holding 10-20%.
Unfortunately at this time the equity is not an option.
Thanks again!
Robert
I have run into the same problem with financing. I can not seem to find anyone out there willing to do seller carrybacks with out me putting in my 10% for 6-7 unit buildings. Am I looking in the wrong places?
i wish there was someone in jersey looking for a partner id be jumpin into it...
this seems like a good deal, why do you need a partner? to raise capital?
if you did all the due diligence, couldnt you put together a package for proposal to other investors in your area? you could put an ad in the newpaper under the investment section soliciting investors for a project, and send people all the information and a business proposal...
im sure you oculd raise a lot of money that way to form a limited partnership or even just to get 1 more person to join you...
you would have a mob of people to pick from....just an diea...good luck
~Andrew
Thanks for ther response.. Normally, I wouldnt need a partner-but I had the bright idea of living and working in the Baja (owned restaurant and construction mgmnt co) for 7 Years and banked "offshore".. The results are that I dont have any credit score in the states now. Never mind -the fact that-I don't have any debt and own everything (paid cash) including house.... I tried the newspaper ad thing with the Chicago Tribune (3 hrs away) but had only one positive response...and a lot of B.S. ones too...(Sharks) or prohibitive interest rates. This deal is too small for most investors..It seems that I could get a 1 Mil++loan easier?-?-I just want to get started with this one-use it to get some credit history-Start a income, Then move onto the bigger deals. Thanks again for your response. I welcome any ideas or comments
I have a 700 credit score but my length of trade lines and being self employed for only one year causes me a problem, otherwise I'd be interested. My partner and I do SFH-4 unit in DSM, IA.
Quote:
On 2004-12-24 13:04, eldorado1 wrote:
Thanks for ther response.. Normally, I wouldnt need a partner-but I had the bright idea of living and working in the Baja (owned restaurant and construction mgmnt co) for 7 Years and banked "offshore".. The results are that I dont have any credit score in the states now. Never mind -the fact that-I don't have any debt and own everything (paid cash) including house.... I tried the newspaper ad thing with the Chicago Tribune (3 hrs away) but had only one positive response...and a lot of B.S. ones too...(Sharks) or prohibitive interest rates. This deal is too small for most investors..It seems that I could get a 1 Mil++loan easier?-?-I just want to get started with this one-use it to get some credit history-Start a income, Then move onto the bigger deals. Thanks again for your response. I welcome any ideas or comments
I have found a ton of funders for your senario. There are a bunch of limited doc funders but they all require some sort of credit score- somthing I dont have. If your interested I could e-mail a list to you. It seems that the silly score is more important than anything else.
Ok, with the additional information I have a new suggestion to make. Go back to the sellers, tell them that you cannot get financing because of the problems with their not reporting the cash, and not being fully occupied. Ask for a two year lease/option agreement or a management agreement with an option. Even better would be a two year lease/option that would roll out into a land contract at the end of year one if all the payments were made on time. You take over management (which lets them retire) and give them a monthly payment pretty much equal to what they are making now.
During the two years you establish a personal credit history here in the states and you straighten up the management of the property. In this way 12 months from now you have income and expense statements that verify the cash flow and support a new appraisal. Based on the higher value you refinance at 75% LTV-- i.e. about $400,000 or more than the balance on your land contract at that point.
Thanks for the response -Commercial That's just what I had going in the begining (except for the lease/option). They were willing to hold a land contract note..But as time went on, financial situations changed with the owner(s) and probally compunded with the financing probs I had, they (partners) backed out of any finance deal, but dropped the price. (50K) I'd love to get a lease/option but I doubt they would go with it-Well, they would, but their partners won't- my whole prob-besides financing-is I'm dealing with several partners here. One's an attorney -One's a bar owner- Neither one I know- And I'm the new Kid in town-a small town where everyone knows each other-except me ! I know after a year of bookeeping, I can get a loan AND rebuild credit-and I really hate to give away the equity just for the necessity of a one year note. The place also needs some minor improvements, (paint/sealcoat,etc.) which will tap into the first year profits,but they can be postponed. I thought about asking for the lease option, but I'm doubtful they will accept and give me the 50k reduced price. Your right about the LTV going down to 75%- all I got to do is report all the income. Especially if the new appraisal will get 600K. And...to top it off, you probally know this being from Illinois, but the Thompson prison is 10-15 minutes away. Which has been sitting vacant for years now due to political bumbbling. Due to the change in politics, It will probally open soon-we're talkin 800 families moving to the area (the realators will not be able to keep up) and the people who have "residents" in there as well. I wanted to get this place HUD-section 8 compliant (there currently is NO section 8 in this county) and eventually fill the need. I'm just havin a hell-of-a time getting my foot into the door due to the FICO score game. I'm determined to do it somehow. The wifie sez move onto somthing else,but there's nothing else large enough here to warrant my time- This is the biggest re project around here. Besides I got four months into this now- I'm not gonna just throw that time away and admit defeat-not my style. Last resort would be "Hard money loan" with prohibitive rates. Got a lot of feelers out there but no responses.Any other suggestions??
Got to the lawyer and the bar owner independently. Introduce yourself. Have a chat. Don't try to negotiate anything. Find out about how they are feeling about the deal. Tell stories about your time in Baja. Listen twice as much as you talk.
What you are looking for here is the motivation of each of the partners. I take it the third guy has been the operator. Point out that his health is deteriorating and that the management of the property is likely to deteriorate with it. Ask if they are willing to take over the management if the current operator becomes incapacitated. Give them some down side to continuing to own this dog. At this point they are along for the ride on the other guys labor. Point out that this ride might get bumpy.
Worst case try to buy out either one of the partners. Along with the existing manager this gives controlling interest. This would not be my first choice since it gives you partners you didn't get to pick but it is an option.
Another option, get them to lever the property up, finance it for all they can get. Then do your lease/option or Sub2 which allows you to use their credit and their ownership position to increase the debt, thereby giving you a low-cash position.
Well, I believe neither investor is motivated at all. In the whole time they are involved, they never asked to verify the books-or even look at them. Their equity is probally gained by some discounted real-estate deal in the past-coupled with a tight friendship. When asked about the percentage, it's always sidestepped. Both investors are soverign, their investment is not an extreme issue to them. (sounds weird-but true). I believe their investment was a gratitutious maneuver to help the husband / wife team. Remember this is a small town where everybody knows everybody. Could be a cousin by mariage,Who knows?? Granted, the husband is incapable of managing the property, but the wife does it-all she does is collect and pay bills- along with trying to run a reality, Even if somthing happened to her, her daughters would could take over. This dismembers my leverage with them for a buyout- that is- if they had any large amount of investment to begin with. I think that-even if I was able to buyout both of their interest, I still wouldn't achieve 51%. I researched these angles you mentioned- except for the lease-option-which I'll do after the holidays. I'd much rather just get them out of the picture altogether. I believe their cash motivation may be driven by medical bills. She's been co-operative with any prospective lender that has contacted her. A re-finance on their part would require a new appraisal, which I dont believe the cash is available for. All of their properties were listed at the certificate sale auction-although they were paid prior to the final due date- but were past due for the whole year. Even when they were going to write the note, they wanted me to sign a sign back deed-(not a quick claim) in case I defaulted-which would relinquish my powers of control. It just sounded too fishy to me.
P.S.I Italked with her about writing a note that would be sold at the closing table,(5%-30yr amor) but can't find a note buyer that didnt want a ridicilously huge discount. I'd simply split the difference with the discount by adjusting the sales price. Any suggestions??
Well, I'm at my wits end. I've just about exhausted ALL possibilities for financing this project by myself..Everybody lives and breathes FICO scores. The owners don't want a lease option or land contract, Hard money lenders just want to bend me over. At this point, all I want to do is get into the property-even If it means giving away 60% equity-I've got too much time (4 months) into this, too much energy, too many ulcers derived from dealing with the US financial institutions,, ANY TAKEERS???????
No, I do not have a FICO score-as of yet...Things are in place to re-establish one. Where did you get 700??
I can still do the loan with no FICO score, but the LTV will be 65%
Well, Your not going to believe this....
Pay cash for everything and get no credit score...
Put your satellite,celluuar,and internet bills on one secured credit card for two months and get a 700 FICO !!!
I obliously have no problem now in pulling a mortgage on my house and being able to put down an additional 10% (35K) on the building
What a system we have here in he states...
i thought most lenders required at least 3 trade lines that have been on record for at least 1 year..
Eldorado,
Any luck, were you ever able to secure the deal? Just read your post and am curious to the outcome? Did you try attending local real estate clubs to personally speak to some investors?
Hinestro
I have good credit. How much money are you looking for from your potential partner?
Well, Im new to the site, just read your situation and ill just put my 2c in. First, from a finance stand point your price $350k, is very very attractive if the rents average $350/mo. From a Mgt stand point, unless u have a lot of time to manage this property...it could be a difficult. You dont sound like u have the back up money to complete repairs, so youll be "on edge" with every leaky faucet. 1bd tend to turn over a lot and rural renters tend to be more difficult to find (unless a factory is nearby). Im surprised at the 95% occupancy, you should not give up on this deal if thats true...and u have time to get into mgt and operation. Sorry about the lending brick wall, but u are a commercial investor now..."put up or shut up" is the name of the game...nothing like residential loans. Good luck