Please critique this situation

Financing, Hard Money Lenders, Private Money
1

I’ve recently come across an apartment building in a great location that I’m interested in.

Asking price: $519,900
Unit mix: 16 1 bedroom, 5 bachelor
UPDATED FURNACE, HOT WATER TANKS, WNDWS. 12 PRKG SPOTS. INDIVIDUAL HYDRO METERS. UPDATED ELECTRIC. SELLERS MOTIVATED. WILL LOOK AT ALL REASONABLE OFFERS. $12,000 VACANCY RATE INCLUDED IN EXPENSES

Average market rents in the area:
1 bedroom = $648
Bachelors = $511

For arguments sake I will decrease the rents to $550 (1bed) and $450 (bachelor) and increase vacancy to 20% to stay conservative.

This gives us:
Gross income: $106,080
Minus Expenses (45% of GI): $47,736
NOI: $58,344

I would at MOST be willing to pay $450,000 for the property.

I also would move into the building so it would be owner occupied.

Below is my personal info for you to analyze:
-24 year old full-time university business student
-I currently make roughly $20,000/year
-I currently have $30,000 in liquid savings that could be used for down payment, reserves, or be utilized in the best way possible for this deal.
-$0 debt
-credit score is 700+
-My grandmother has agreed to co-sign for whatever venture I decide and she has a net worth of approx. $300,000 and also owns some rental properties in which I manage for her.

With the information given above, can someone provide me with a financial plan of action in terms of the best possible financing I would qualify for, the terms, and etc if I were to acquire this building. Also, I obviously do not have enough for a cash down payment in the 15-20% range so what are the options I have in terms of the down payment?

Regards,

DC

2

Could you put anything down? I may have somewhere to go with that deal.

3

I checked out with lender and it sounds like it fits the criteria for the company with a low down payment. This is what they specailize in.

4

COuld you relay the terms fo the financing, interest rate, and etc… so I could get an idea of what I’m looking at?

5

DJM,

Please make sure to PM the information to DC group, and not post it here in the forum. Thanks.

6

Does anyone have an idea of what kind of financing I would be looking at for this deal?

7

Chris,

I understand, Thank you.

8

DC,

I sent you an e-mail.

Thank you

9

Dean,

Thank you for your consideration, and for not being offended.

10

DC,

I talked to a loan broker recently who specialized in high LTV deals that were owner occupied, such as a multi-family project like you’re talking about. They sent me a “rate sheet” which I have in my possession. It’s too detailed to include it all in here. The terms don’t really sound attractive to me personally, but here are a few examples: They require at least 3% down if they are owner occupied. If you put 10% down, the rate would be less. But assuming 3% down, this is what you’re looking at:

6 month arm 30 year term 9.25% and 3.125% in points
2 year fixed 30 year term 10.125% and 4.125% in points
7 year fixed 30 year term 11.125% and 3.5% in points

If you put 10% down, the two year fixed would be 9.75% and 3.75% in points. Just examples of what you’re looking at.

JD