Raising Funding and Equity question

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Hello everyone. I have recently developed a growing interest in trying to acquire multi family apartment units. My question has to do with raising funding and how that affects ownership.

Lets say for instance I find a deal I like for 1.2 million. I have no money to put down. A bank would probably require 240k down (20%) (Correct me if I'm wrong)

Maybe I can get the seller to finance 120k (10%) for 6% interest and maybe I can get another 10% from investors for 8% interest 60/40 split

So now I have raise the money. 10% from the seller and another 10% from investors.

I now owe the seller 7,200 (6% interest)  and the investors 9,600 (8% interest). 

After the seller and investors are paid their interest. What percent of the property do they own? And how do I go about gaining 100% ownership? 

This is where I'm stuck and don't see a lot of info on. Yes people get the deals yes they get the deals funded. But do they get full ownership in the end? Do they not want full ownership or does it just not matter? 

Appreciate any help.

If you're doing a 60/40 split it sounds like the investors own 60% of the property.

And the only way to gain 100% ownership is to buy out your investors, which will depend on your agreement with them.

Remember though, 40% of something is better than 0% of nothing.

A lot here to go through. 

First, with little experience you likely will need to come up with 25-30% down or more. Next, if you have no money and little net worth, you will need to find a partner or sponsor that does (in this case at least $900k and has around $400k in their bank in cash) and is willing to sign on the loan with you (likely they will want to get paid 2-5% of the purchase price and sometimes equity). 

For money you will need: Let say you get 25% down, that is then $300K, then you need closing costs, which will be about $35k, then you will need a reserve account of between $50k-$75k, for a total of around $400k (talk to banks about their requirements, because everyone is different)

Now for the raising equity part. You said you would pay them 8%. That is really low, but if you can get by with that, then great. If you are paying a straight interest rate just make sure you can still cash flow. Most investors are raising equity and giving the investor equity. 

This looks as follows (everyone is different and there is no standard):

Investor funds: $280k of the equity needed

Investor receives 8%preferred return - this means they get 8% before you get any thing, then you split the rest

Investor gets 70% of the remaining cash flow

Investor gets 70% of the profit once the property is refinanced or sold 

Sponsor (you) get 30% and maybe a 2% sponsor fee on the gross collected rent and possibly a deal fee of 1-3% paid up front when the deal closes. 

Typically investors are not bought out, but I have heard of that happening. In my deals the investor stays in until we sell. 

Well if the seller and the bank were paid their interest, that would be 30 years later and the mortgage would be paid off and then you would own the home with a 60/40 split with the investor. 

For a $0 investment you own 40%. That doesn't seem bad. You have low risk on this deal. For someone with no experience and no money, I'd be jumping for joy if given this opportunity.

@Daniel Alva , you need to lower your expectations. No one will give you 40/60 split on your first deal especially if you have no money in that deal. A more "typical" structure of the first deal would be: you provide 20% of the down payment and you get 20% of all the profits from the deal (80/20 split) along with 1-1.5% of collected rents as asset management fee. You will also get your share of profits as a 20% investor (20% of the 80%).

You do many projects, not just one. E.g.: $10M deal with $2.5M equity yields 10% cash-on-cash or $250K/year. Sponsor gets 20% or $50K plus asset management fee that we will ignore for simplicity. 4 projects like that and you are at $200K/year mark. Should be enough for most people to live on.

Originally posted by @Daniel Alva :

How does someone become "Financially free" doing this? Does not seem like much money to live off of.

 Real estate is not a get rich quick thing... especially with no experience and no money. 

Although that to be said, you can become financially free very quickly relative to the traditional path.