Need advise on financing!

2 Replies

Hello, I’m spanking new at this and I’m more interested in buying and holding. I’m looking into a 6 family in NJ that is on the market for 550k...the gross annual rents are $83,400...taxes are $14,489...insurance is $2,600...utilities about $2,000...repairs and maintenance about $5,000. Property was rehabbed a few years ago and it’s fully occupied. This seems like a no brainer, but my husband and I don’t want to put all of our eggs (cash) in one basket as far as the financing goes so we are looking at the options with VERY low money down I’m looking at hard money and private lender options. Can someone give me advise on this based on this property. What would you do?! Thank you!

This property would have to be financed with a commercial loan since it is 6 units. You will find that commercial loans will require at least 20% down. A hard money lender or private lender may have different down payment options but don't expect anything much lower than 20%. If you are looking to put in as little money as possible you need to have a money partner. Otherwise, I don't see any way forward for you. 

@Jane Batista . In addition to what Frank said, you should also consider the terms of Hard Money lenders. In general, their fees will be higher and their rates also higher and they might want to be repaid a little earlier. Private money is usually good if you are going to exit in a short period of time (flip, quick refinance, capex, ...etc). I would suggest you call around and see how much the money will cost you and see if you will still cashflow given the price of that Hard Money. If I were in your shoes, I wouldn't want to be cashflow negative !!!   

One option to consider and discuss with a commercial lender would be to get a commercial loan with interest only payments for let's say the first year. 

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