This is my first post on this forum and was looking for advice from fellow investors/developers.
A little background on me. I am 20 years old and have been in real estate for about 5 years now. When I started I bought a cheap single family house after the market crash and fixed it up to rent out. Then I refinanced it to do another and rent that one out. I acquired 6 single family properties from doing this. Last year since the market went up I decided to sell off 4 of them and start in my first house development. The house is just about finished and getting lots of action on the market. I believe developing is my passion.
Now for my question I was looking for help/advice on. I want to develop apartment complexes to have cash flow. There is this piece of land in a good area that I could build six 8 units on. I was wondering if it was possible to put 20% down on land build the first 8 unit with cash then refi it to build another and keep that domino effect going to build the rest. Does anyone have experience with this? Or is there a better idea to finance this?
I have high credit, good income, but not enough net worth to acquire a loan the size to build all six 8 units at once. My net worth is about $650K.
Thank you spending your time to read my post!
@Noah Zelko Welcome to BP. So you are 20 years old. Real estate for 5 years. Bought and flipped houses. Sold several at the peak and you have accumulated enough cash to put down on land and enough to develop the first of several 8 unit MF! Oh yeah great credit and NW of 650k. And you want some guidance from us? Wow I am speechless and can't wait for the thread to get going!
Do you have a good relationship with a local bank in your area? I would start there with regard to the loan. If not possible, then maybe a joint venture with someone who has the credit to secure the loan parameters
On the other hand, congratulations fir doing what your doing at a young age, wish I had done the same, but it’s all good!
@Noah Zelko Noah glad you are getting advice................search for this thread: net worth must be equal to loan amount.............and there is an article written by @Matt Faircloth who posts on here and is in the know when it comes to commercial financing. All the best! Let us know how you are making out.
@Noah Zelko the net worth requirement is usually mentioned in the context of agency debt (Fannie/Freddy). Your local/regional banks will be more flexible and will value your prior experience and the business you bring to the bank.
I'd be curious to hear about your projections of your buildings? What do you think you'll have in each building, what rents are you expecting, and what is the cap rate on a new apartment building in your area?
Originally posted by @Noah Zelko :
@Kate J. Thank you so much for saying that! I’m no pro but hope I can teach others as I learn. I hope I can succeed with this particular idea. Was your project commercial? If so did you need to have equal net worth to the loan amount?
The land was subdivided in two lots and we build 2 sfh. I dont think they need it, but the bank did ask about all income and net. However my net was higher, so I am not sure if it played a role.
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