Need some advice on a multifamily financing plan I have to see if it is going in the right direction. I am planning on going under contract soon.
Ok here is the basics.
Apartment complex to buy
me and one other partner are purchasing it.
decent 8 cap…with .01 % vacancy in 15 years…a class B building
Equity and cash flow split is as follows:
Me 55% (extra 5% to manage the property)
I am going to refi my home which is fully paid for and pull out 65K for the downpayment.
My partner is paying the other 65K in cash
total downpayment =130K, owner carry back 10%
Now…i will use my monthly cash flow split to pay back the loan on my home and still make a few bucks
My partner will take her 45% cash flow per month
At 5 years my proforma says we will have 522K in equity
The owner is carrying 10% 30 year fixed at 5.5 balloon at 5 years…
So I just refi at 5 years and pay that off correct?
I will plan on buying my partner out at some point probably 5 years as well. At that point do we refi to pay off balloon and I also refi to pay off my partner and cash out her equity share? Does this sound resonable. I then assume full equity share and a new loan?
Is it crazy to mortgage my free and clear home to come up with a downpayment???
Thanks you anyone who has advice on this deal! I owe you one…
So I ran that scenario on 80 LTV of the purchase price
and no way does it make sense…can you tell me why you chose these numbers?
From what I see in my original numbers as stated above I can easily service both my first and second mortgage (owner’s financing) and also pay the debt service on my personal Home Equity Loan and still have a cash flow.
I don’t understand where the 20yr at 9% comes into play…I have an I dea but still it doens’t make sense