Need Help/advice On Purchase Of 50+ Unit Property
I'm looking at a 50+ unit property with a nice mix of 2bd and 1bd apartments. Price is $1.75m but I think I can get it for about $1.6m. I've run the preliminary numbers on it and it looks interesting. The problem I have is with the down payment. The seller isn’t willing to carry back anything. I have $110k in savings, a smallish investment portfolio, and about $90k in equity spread over four 4-unit properties. Can anyone suggest how I might be able to raise the funds necessary for a down payment, or possibly suggest a good organization to help me finance this purchase?
Thanks a lot.
We cannot suggest anyone per the rules of the site. But I would suggest that you look at the hard money lenders as it will require no down and interest only payments, but the costs would be about what you have to get the loan done. If there is room to build, get a construction loan. Or if the seller has an existing mortgage offer to take that over and find a secondary lender for the rest. There are also private lenders that have that kind of money as well. If you were in Florida I would suggest turning it into condos and getting a loan based on that, but I dont know your area, so I cant say if that would be a good idea for you. You may also want to partner with someone that has he money with a buyout after a certain amount of time. If the seller has a company that owns it, offer to put a down payment in exchange for a part of the company, and then do a refinance as an equity partner as well. There are more ways I am sure, but thats all I could think about at the moment.
Hope that helps,
Kyle
What do you like about this deal???
It appears to be about a FMV deal with an unmotivated seller. Why force it? $150K in equity in a property that big can swing by that much very easily and get eaten up in closing costs, fees, etc.
As for doing it with no money, you may consider
making the seller a partner in the deal.
Find another partner with cash or collateral
80/20 lenders (Lately I've heard of a few commercial lenders doing 80/20's....but have no experience with them myself)
If there's room to increase the value by 20%, you may be able to lease option it and then refi after a year.
Buy it on contract, and refi after a year (If he'd work with you on a short-term carry).
good luck.
Thanks guys. It is a FMV deal, and unfortunately there's an agent involved in this as well. Still, it's a good property in a good location, and appears to be in decent shape. You've given me some good ideas to work with and I'm certainly going to look into them. If anyone else has any ideas, I appreciate them. But in the meantime, I'll see what I can do with these.
I know I will sound like a banker or broken record but I think its to soon for you to buy a 50 unit especially if it costs too much. Be careful when you buy those multi 30+ units you ought to have a good availability for cash just in case. Leverage is great as long as you dont abuse it. Find a better deal before you spend the money. I like the fact your agressive. Raise money by using your existing capital to flip a bunch of properties and double or triple it in 12 months or less. Maybe a partnership? Sometimes if the deals are awesome the brokers will front thier own money for down pymt. Then youve got a good deal. Happy hunting!
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Kyle[ Edited by KyleGatton on Date 06/01/2004 ]