apartment deal

Financing, Hard Money Lenders, Private Money
1

hi,

my husband and i are looking at a possibly great deal on a very large apartment complex. we will be able to assume a large part of the financing which has a great intrest rate. we are lacking about 12% financing or close to 1.5 million. i think the seller will hold the 500,000., leaving us w/ 1,000.000.00 to come up with.
this is a great property, location, aned investment. the income is wonderful as well.

we know a few people we might be able to drag in on this deal but this is where i need the advice…
i don’t want to deal with a parner.
i have experience managing a running apartment buildings, and most of the people we are going to contact do not have experience.

i’m trying to think creatively and will except any and all advice.
i’m thinking about offering these investors 10-12% interest to be paid over 15-20 yrs. i am also thinking about offering them 1% of the monthly profits, or about 600.00$ per month as extra incentive.
have any of you ever heard of this or does any one have any other ideas?
i don’t want to loose this deal over somthing as silly as $1,000,000.00…lol.
would it be possible to contact a hard money lender for this type of situation?
would any bank hold a second for $1,000,000.00 based on the income the real estate produces?
i hope these questions arn’t too silly…i’ve never done anything this big.
thank you,
wendy

2

Sent an email off requesting some more details…

3

hanatal,

what is the purchase price?
cap rate?
noi?

4

keith,
hi
asking price is 14,800,000.00
cap rate is about 12.6% using asking price (docs are at office so i’m working from memory but it would be 12 somthing)
we are thinking about offering 13,500,000
the 2005 noi was 1,132,546.
cash flow was 510,072.00.
this is a 455 unit in an upper middle classs community in which we live. while the rest of michigan is quite depressed southern genesee county and northern oakland county continue to grow.
rents average 521.00 so there is room for an increase.
there are a few studios, some 3 bedroom town homes but predominately 1 and 2 bedrooms
there is exsisting assumable 5.33% financing until 2010.

i have gone over their expenses and they seem a little high to me.
vacancy rate is at about 15% very high. i drove by the property yesterday and it is beautiful so i’m sure i could change that to at least 6%, which is the areas average.

i have even gone over the figures if we were infact to buy and seek new financing at 10%…still a money maker, but of course if we can assume the first we will.

we are going to ask the seller to hold a second (or third) for 500,000.00.

my husbands fico is currently a little higher than mine at about 670. we plan to pay off some cards on mon. hopefully this will make an impact.
my husband owns a convenience store (rents the space)
and grosses about 700,000.00 per year. he has 50% ownership in another that we do not currently recieve payment on (family reasons) i own a daycare/preschool center (space rented) and gross about 225,000.00 per year.
we also own 27 units…a mix of sm. apt.'s and sfh, couple of duplexes.
we have about 200,000.00 in equity in the rentals that we could cross colateralize. we are pretty much maxed in our residence. last appraisal was 264,000.00 we owe about 252,000.00.

keith, i know this is one heck of a deal. it is bigger than anything we’ve ever done but i know i can do it. i have 15 years of business experience.

i have thought about using private investors to come up w/ the additional funds and i think i could get enough together but we would realy like to do this on our own ( just convinced my husband to jump on board)

i’ve never tried anything and failed…not because i’m lucky but because i work like crazy to make somthing work. i believe anything can work, one just has to keep looking sometimes to find out how.

thank you for your weekend time
wendy

5

I have don’e many many rental deals and would never do them with out cash back. if its a good deal U should never use your own $$$, If donald trump doesn’t use his own $$$ U shouldn’t either…lololol… just food 4 thought, I would test the vender, how low He/she can go!!!

6

mathshingdo,
thanks for the vote of confidence, my thoughts exactly, i’ve done quite a few land contracts w/ no money down and i’ve done some pretty good deals w/ banks involved. while all deals with the banks have been creative, they have all required some of our money put into the deal, even if its just 5%.
How can i structure this kind of deal with little or no money down?
we obviously will pay for an appraisal, but we will structure the purchase agreement so taxes are not prorated at time of closing. this will save quite a bit.

we do have some money, some equity, but if you could give me feedback i would surely appreciate it.

wendy

7

hanatal,

I am going to check into this and see what I can find for you. What is your last date on the contract?

8

matshingdo001,

hey do you any any no down ideas for me? where did you go?

9

I think you will have an extremely difficult time getting into this large of a purchase, not to mention commercial, with no money down or even just 5% down.

If you don’t have the money you’ll want to look into private financing because you’ll need to make it look like the cash is coming from your bank account. Let us know if you can work this with no money down…

10

i’ll keep you posted.
wendy

11

Are you looking to do a JV?
I can help.

12

Thanks,
We’re going to try to go it alone but if all else fails I’ll will consider a jv. Thank you,

Wendy

13

How’s the deal going Hanatal? Any luck?

14

wow a 1.5 million $ apartment??

15

it was a 14,800,000. $ deal and it fell thru :'(,the sellers financing i found out was a mandatory assumption or he would pay a steep penalty. in order for us to assume we ( personally) needed 2.5 mil in assets.
it was worth a shot!

16

With your level of motivation I’m sure you will find something good :slight_smile: .
What do you mean by mandatory assumption? Also why did you need 2.4 M in assets?

17

Could you send me the info to that deal and maybe we can help you. Let’s discuss offline.