Assuming Debt on 56 Unit Deal?

[Michael K Gallagher]

Just perusing Catalyist and came across a 56 unit garden apartment deal in a solid area and the deal mentions the ability to assume the debt vs the early payoff fee on the current debt. Can anyone elaborate on the specifics of what to look for in this situation or what would guide your decision around to assume the current debt or bring your own?

[Charles Seaman]

@Michael K Gallagher The decision about whether to assume the existing loan or obtain new debt simply comes down to your return metrics.  With an assumption, you'll look at the same things you would with a new loan (principal balance, interest rate, interest-only remaining, maturity date, amortization period, etc.).

In general, assumptions have been very attractive to me lately because the only deals that I can get to cash flow well involve assumptions.  This is because of the lower interest rates that these existing loans have.  The biggest downside to assumptions is that the leverage might not be favorable if you're buying the property for a significantly higher price than the seller did.