Getting started in Multi-Family 5+ is difficult

[Steven W.]

Hello BP family!

So I found a GREAT (in my opinion) smaller apartment complex, however it is on sale for $1.5M+. The most expensive property I've ever purchased is around $500K and it was on a conventional mortgage.

The property meets the 1% rule and based on my calculations would have around a 15-20% total ROI. This property is in a great and appreciating area.

My problem is that I don't have enough for the downpayment and even if I did, I don't have any experience with commercial lenders. 

I would go to family, but even they don't have that kind of cash lying around. I do have enough equity in my current properties, but don't want to sell my portfolio for one apartment complex. 

Anybody have any experience on creative financing or partnership (with strangers)?

[Charles Enman]

Steven-

You mention you have properties you don't want to sell. If you have equity in those properties, you may be able to use them as collateral on a loan for the down payment on the new property.  That's what I did.  I got a loan against two of my properties - one I owned outright and one I had an existing loan on - and used that money for the down payment on a new property.  Effectively, I bought the new property with no out-of-pocket money.

Here's how I got to that point: I put together a small presentation book that talked about my wife and I, our resumes, our real estate experience and holdings and our financial position. (See this link for info on putting together a presentation book of your own http://www.smarterlandlording.com/smarter-resource....) My wife and I took our little book and visited with the leading broker in our area who specializes in the type of properties we were interested in purchasing.  The broker suggested a couple of bankers we might want to talk with.  We took our little book and met with the bankers.

The bankers gave us a sense of what they might be willing to do with us, should a suitable opportunity arise.  When an opportunity to purchase a new property did arise, our conversation with the banks was a continuation of the earlier conversation we had had with them and it resulted in financing for the entire purchase price using a couple of our properties and the new property as collateral.

Charles