Is it possible to pay for a down payment on a multifamily apartment using a bridge loan? I don't have enough money to buy a 15-unit apartment in Texas; I only have about 15%. I had the notion of using a bridge loan as a down payment, then rehabbing the property and raising the rentals to market value before refinancing.
Investor · Shelton, WA · Member since 2017 · 6k+ posts · 6k+ votes
4y
@Mike Bloom you need a lot more money and resources. Unless you want to lose your shirt be prepared. The bank will want 25% down. Net worth equal to loan amount. 12 mos reserves and expertise. So be prepared to partner if you do not qualify on your own. You do not want to run low on money when taking on a project like this.
On the bright side the potential in making a good building even better is huge. I have increased income in my 12 unit from 75k to 125k in three years. In between tenants we do whatever is necessary and no more-paint, flooring, fixtures etc. We are responsive to tenant requests and we screen very diligently. Very happy with the investment.
Syndication Expert and Investor · Indianapolis, IN · Member since 2016 · 591 posts · 808 votes
4y
Short answer is no. You can raise capital from private investors as equity for the downpayment and costs for the project in exchange of a % of the profits.
Investor · Shelton, WA · Member since 2017 · 6k+ posts · 6k+ votes
4y
@Mike Bloom you need a lot more money and resources. Unless you want to lose your shirt be prepared. The bank will want 25% down. Net worth equal to loan amount. 12 mos reserves and expertise. So be prepared to partner if you do not qualify on your own. You do not want to run low on money when taking on a project like this.
On the bright side the potential in making a good building even better is huge. I have increased income in my 12 unit from 75k to 125k in three years. In between tenants we do whatever is necessary and no more-paint, flooring, fixtures etc. We are responsive to tenant requests and we screen very diligently. Very happy with the investment.
Realtor · Cleveland, OH · Member since 2021 · 1k+ posts · 1k+ votes
4y
In this case I would look to find a partner. Good places would be your local meet up group for investors, an investor friendly realtor with experience or your circle of influence. If you bring the people in these groups a deal you will find the funding. It has happened to me multiple times.
Investor · Detroit, MI · Member since 2014 · 97 posts · 40 votes
4y
@Mike Bloom In this particular situation I say no. Generally you will need more than just your down payment and closing costs to acquire a multifamily property. Especially if there's any sort of renovations needed.
Investor · Northern California · Member since 2020 · 33 posts · 17 votes
4y
@Mike Bloom@Mike Bloom, even though banks require ~25% down payment, you must raise at least 33% of the purchase price to be on the safe side. You will need the additional capital for closing costs and to set aside a budget for reserves.
Have you considered other creative financing options, such as seller financing? Seller financing could bring down your debt and, therefore, the down payment requirement.
Rental Property Investor · Doylestown, PA · Member since 2008 · 1k+ posts · 1k+ votes
4y
@Mike Bloom - something I've come to learn after building my rental portfolio into triple digits...Having a cushion when closing on new properties makes a huge difference. The saying "it takes money to make money" applies. While you certainly can into this business with little to no money, which is what I did, having a little extra capital goes a long way in helping increase cash flow. Repainting the exterior, landscaping, replacing or adding lighting, new flooring in common areas etc. Stuff that doesn't cost a ton of money but when you do it it increases the ceiling on your rents. Stuff you'd probably have to wait to do if you had zero dollars left over after closing. But, if you do it right away you get the immediate rent bumps, you fill units faster and you get better tenants. And the money doesn't even have to come from you. Instead of focusing on getting the cheapest price for a property, you can pay asking but ask for a seller credit at closing. Or if you find the right lender, you can get an interest only period of say 6 months, which will save you thousands which you can put toward improvements. Makes you more money and is good for the bank too because you're improving the asset and increasing the NOI.