How to do first multifamily syndication deal with no money down?

5 Replies

Hi Everyone, 

I am really getting into multifamily in the Indianapolis area and I am looking to scale my business to the next step. A friend of mine who is a buy and hold investor for large multifamily units told me that he prefers to do larger deals because of the cash flow. So far it's working wonders for him and he is only been in the game for 2 years.

I would love to understand what creative financing options are out there to do large multifamily with no money or little money down? I have heard of sellers carrying 2nd mortgages for down payments. What other ways can you do it? 

Thanks

@Jameel Jason There is no such thing as no money down when it comes to syndications. Even if a deal sponsor decides not to put any of their own money in a deal, they will still have to pay to do their due diligence and the deposit. So there're upfront fees. 

Seller financing might be an option but that may create obstacles in terms of obtaining financing, especially when it's one of your first commercial properties. 

@Jameel Jason someone with good credit and net worth is going to have to sponsor or be on the hook for the main loan.

You mention syndication in your subject line but didn't mention it in your question. A syndication is a way to buy with little of your own money. You get others to come up with the money for down payment and up front cost and get a loan for say typically 70% of the purchase price.

The first step is build your credibility with people who have money, Then find a good deal, then structure it so the investors and you can both make money. That may seem basic but each deal is going to be different and evolve differently. 

You might want to follow @Omar Khan and others here. You might also want to scroll through the apartment forum here.

@Ned Carey Thanks for the shout out

@Jameel Jason As @Alina Trigub has pointed out there is no free lunch in life. All the no money down "deals" you hear about either happened after 2008 and, more likely, never happened (barring a few notable exceptions like @Gino Barbaro ). 

They could happen in war zone areas but more intelligent people than myself have the brain power, patience and capacity to fight that battle. I prefer to not inherit other people's problems.

Even if I was to give you a building for free, you'd still have to shell out money for inspection, environmental, due diligence, regulatory, lender and other reports (i.e. major $$$).

Most of these strategies are ways for gurus to market their products. Kinda hard to market "This is going to cost you money upfront and will be a PITA, but is a good way to make money" ;)

@Omar Khan ,@Ned Carey Carey ,@Alina Trigub  thank you for responding to my post. 

I do have money reserved. I was just interested to learn more about creative ways to get large multifamily deals with little to no money down. I am also thinking more along the lines of BRRRR for large multifamily. Even if I do spend money I want to be able to recover it so I can repeat the process.