Finding Money For Large Multi-Family Deals

10 Replies

OK, so I can go to a bank and get a loan for a $350K 12-plex by putting 20% down but what if you want to purchase a 100 unit apartment building?

If you have great credit and about 100K but don't have a half million net worth it seems it is not that easy to get money.

What are some creative ways to get into a LARGE deal when you are missing the 20% down (maybe only have 10%) and your net worth is not through the roof?

I know you can find another investor but even then how do you go about vetting them and not getting "screwed" in the deal?

Does anyone have any experience in large multifamily deals that was missing either the 20% down payment, net worth or both?

Can you share your knowledge on the subject please?


Thanks!

Private investor financing

Go to your local Real Estate Investor club meeting or better yet start with friends/family.   You have a Doctor, a Dentist, a Lawyer.   Start there!

@William Ellis

You can get the seller to hold a second mortgage for 10%. A lot of the smaller community banks will allow that. I've even seen some where the borrower comes in with only 5% down after a 75 percent bank loan and a 20 percent seller second.

That's an aggressive ask though so there has to more more to offer the lender. Maybe you're buying a significantly under valued property, very strong cash flow or you can prove that you have experience.

If this is your first deal, going to be a lot tougher.

I have bought a few deals on a lease with an option to purchase.  Then either exercised the option or sold the property with a double closing.  The seller wanted to know my track record first though.  It was important to them that I was experienced at being able to turn a poor performing property into a strong performer.

@Steve Olafson

With the lease option can you tell me a little about how you structured those? Did you lease for a year or two with none of the money going towards the purchase price to entice the seller? or did you have some of the payment going towards the equity in the property?

I realize I am new to this but I am determined to find financing for larger deals. A 50 or 100 unit deal seems a lot more appealing to me than house by house 50 times. One roof, multiple tenants, cheaper management, all are much more enticing. 

Any more ideas? I know there are plenty of people buying these larger properties without astronomical net worth and down payment money.

I am very interested in the aswell.  I'm not to that point yet but I hope to be in the very near future.  

In two cases there was no money down.  I had a two year contract in which I made a lease payment from the cashflow.  At the end of the contract, I refinanced the properties and paid the agreed upon price plus eight percent.  It was expensive but it was no money down.

The nice thing about the arrangement that I had on these was that if financing was not available, the seller and I went into a pre-arranged contract for deed.  So I actually had 5 years to obtain my own financing.  I did not need it but it was there.

In another case I had to put down 10% initially which went toward the purchase.  The seller carried the loan.  This property had a negative cashflow initially which is why they did the carryback.  Good financing was not available due to the financials.

I sold the property after 2 years and did a double closing.

I think the above have the waterfront covered:  Syndicate or get creative.  Overall, its about beliefs.  If you believe its possible and do direct mail via listsource or smile and dial via loopnet or prospectnow you will find it.  @Bill Walston  is a master at Master Lease Options in this space.

Originally posted by @Douglas Dowell :

I think the above have the waterfront covered:  Syndicate or get creative.  Overall, its about beliefs.  If you believe its possible and do direct mail via listsource or smile and dial via loopnet or prospectnow you will find it.  @Bill Walston  is a master at Master Lease Options in this space.

 I have learned more about Master Lease Options (MLO) from Bill Walston than other source.

See this link for MLO links.

http://bundlr.com/b/mlo-master-lease-option

Thanks for all of the great info.

I think the fear of screwing up is the main obstacle. My motto is if others can do these large deals then why mot me?

The thought of 50 doors on one deal sems alot more enticing to me than 50 separate closings at least if cashflow is the short term goal.

I would be interested in seeing more in depth the lease option paper trail. This info would be great . A timeline of events and which paperwork when.

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