Explanation Please
I posted this in another forum and though that I might get a better response over here, so here it goes.
Newbie here when it comes to large projects. I've been clicking around on TCI for fun. Here's what I've found, and I hope someone can elaborate for me.
Apartment complex in a nice area near me.
98% occupancy
56 units total
Scheduled Gross Income: $340,380
Laundry/Other: $12,500
Effective Gross Income: $335,861
Operating Expenses: $135,668
Net Operating Income: $200,193
Debt Service: $145,914
The asking price on this guy is $2,595,000. After is says the following which I don't understand too well.
Debt Type: Existing
Loan Amount: $1,860,000
Interest Rate: 5.00%
Amortized Over: 25
Due In: 10
Annual Debt Service: $130,480
Loan Description:
Assumable financing of approximately $1,860,000. 10 year balloon until 1/1/13.
So are they looking for someone to take over the existing loan subject to? Would it then be due in 10 years at 5%?
On a more general note, does this look like a good deal? How much money would one have to put down on a project of this scale? This is what I eventually want to work up to. Just curious, any thoughts would be appreciated.
Sounds like you have to formally assume the commercial loan. Subject - to isn't assuming a loan.
There's a ton of equity so the deal depends on how creative (or not) the seller wants to be.
Most commercial loans are 20% down - period. And my experience has been that these sellers are companies that never want to be creative. Call up the broker and see what the deal is. Can't hurt!
Quote:How much money would one have to put down on a project of this scale?
Your downpayment is the difference between the $2,595,000 purchase price and the existing loan amount of $1,860,000. Unless you can negotiate a lower purchase price, your down payment on this deal at these numbers will be $735,000.
It never hurts to ask, you might find the seller is motivated after all. And... why not take the property SubTo?