Need Advise-- Multi Family Financing

[Account Closed]

I'm looking to purchase a 30+ multi family to add to my portfolio. However, I need to find a way to put low money down on a loan. I currently own a duplex and using the brrrr method- I'm still in the process of rehabbing it. I've been talking to a few personal lenders, but they're quote is the same of what my local bank is quoting me. Should I consider partnering up with someone at this point for additional financing? Thanks for your responses

[Michael Ealy]

Originally posted by @Account Closed:

I'm looking to purchase a 30+ multi family to add to my portfolio. However, I need to find a way to put low money down on a loan. I currently own a duplex and using the brrrr method- I'm still in the process of rehabbing it. I've been talking to a few personal lenders, but they're quote is the same of what my local bank is quoting me. Should I consider partnering up with someone at this point for additional financing? Thanks for your responses

 Becky,

The fact that all you've done at this point is 1 duplex and it is not cashflowing yet, it's unlikely, even if you have the 20%-25% downpayment that banks will lend you money.

Apartment lenders usually require:

1) You have enough (25%) downpayment
2) They also have liquidity requirements: meaning you have to have at least 6 months of mortgage payments set aside
3) They require you have some experience with rentals (the more units the better) or have a partner/loan guarantor who has the experience
4) They also have net worth requirements, which is usually equal to the amount of the loan. If you're borrowing $1M to buy a 30 unit apartment, your networth has to be at least $1M or more

So your only option at this point is to look for an experienced apartment investor who is willing to guarantee the debt as well as supplement your downpayment.

I strongly advise for you to NOT raising capital from private investors at this point (without an experienced partner/ loan guarantor) because of your lack of a track record. Without any track record, you have no right to risk other people's hard earned savings in your deals.

(I mean no offense - I own 1,000 apartment units and been doing this since 1999 and when you're new to this, you don't know what you don't know and you should use your own money first on your first few deals before risking and possibly losing other people's money. Because once you lose other people's money, you lose your credibility and it's going to be hard to raise capital again.)