I’m trying to gauge how tight lenders have become for financing on apartment buildings (i.e. 6-12 units).
I’d really appreciate any feedback on the following scenario. I know that there are additional specific details that would be considered.
Co-borrowers. Both have stable full time jobs with good salaries.
Excellent personal and business credit
LLC has existed for 2.5 years
4+ years experience in REI
Building (6-12 units) would be in “good” shape. Perhaps needing cosmetic/minor work and more attentive management to reach full potential. But the building WOULD BE performing as is. It might have rents that are ~15% below market b/c of lazy management or the need for cosmetic work, for example.
CAP = ~9%
20-30% down payment
Would be willing to go Full Doc, BUT… a portion of the down payment funds would come from A) $$ from equity lines on other properties and/or B) private investment from an individual (which would be “secured” only by a promissory note; would NOT be in “second position”).
It’s this last variable that I’m obviously most concerned about.
I know that every lender is a little different, but considering the other factors, how big of an issue would “unseasoned” down payment money be?
I’m trying to anticipate how attractive/unattractive a scenario like this would look to a lender.
I do not have a specific property under contract at the moment, but am trying to get some general opinions about my scenario and, specifically, the down payment seasoning issue.
Here’s a sample deal for the sake of discussion:
6-family
GOI: $52200
NOI: $28710
Hope that helps some.
Thanks.