Rental Property Investor · Fort Lauderdale, FL · Member since 2015 · 65 posts · 15 votes
Looking for advice as I'm getting closer to putting in offer for on an apartment building in Texas. For those of you who have done deals with partners, how would you structure a deal as follows? I found a 54-unit apartment building with poor management and 10% occupancy for sale. Need to buy with all cash. I have about 40% of the cash to put down, and seeking another 60% from a partner. I plan to facilitate the transaction, move to the area for a month or two and work on getting new management in place, fixing up units, marketing, increasing occupancy, and remove bad tenants as needed. After building has been stabilized in 3-6 months I plan to do a cash out refinance where I could pay off my partner and I would own free and clear. With that being said I plan to seek a partner that would provide private lending only, keeping out of daily operations. I'm just a bit confused how to actually facilitate something like this. Would I get the title company to spin off a private mortgage note with terms they accept? What terms would make sense for a 1st note in the $450,000 range? Would 6% simple interest for 1 year, renewable for another year make sense if my partner is a close friend?
Looking for advice as I'm getting closer to putting in offer for on an apartment building in Texas. For those of you who have done deals with partners, how would you structure a deal as follows? I found a 54-unit apartment building with poor management and 10% occupancy for sale. Need to buy with all cash. I have about 40% of the cash to put down, and seeking another 60% from a partner. I plan to facilitate the transaction, move to the area for a month or two and work on getting new management in place, fixing up units, marketing, increasing occupancy, and remove bad tenants as needed. After building has been stabilized in 3-6 months I plan to do a cash out refinance where I could pay off my partner and I would own free and clear. With that being said I plan to seek a partner that would provide private lending only, keeping out of daily operations. I'm just a bit confused how to actually facilitate something like this. Would I get the title company to spin off a private mortgage note with terms they accept? What terms would make sense for a 1st note in the $450,000 range? Would 6% simple interest for 1 year, renewable for another year make sense if my partner is a close friend?
Ido these types of deals all the time. You can definitely offer a note and deed of trust for the investment vs a syndication or JV. That would be the cleanest simplest structure for a deal like this. Once you decide on the terms of the investment with your investor then get with your attorney to draft all the documents etc.
Looking for advice as I'm getting closer to putting in offer for on an apartment building in Texas. For those of you who have done deals with partners, how would you structure a deal as follows? I found a 54-unit apartment building with poor management and 10% occupancy for sale. Need to buy with all cash. I have about 40% of the cash to put down, and seeking another 60% from a partner. I plan to facilitate the transaction, move to the area for a month or two and work on getting new management in place, fixing up units, marketing, increasing occupancy, and remove bad tenants as needed. After building has been stabilized in 3-6 months I plan to do a cash out refinance where I could pay off my partner and I would own free and clear. With that being said I plan to seek a partner that would provide private lending only, keeping out of daily operations. I'm just a bit confused how to actually facilitate something like this. Would I get the title company to spin off a private mortgage note with terms they accept? What terms would make sense for a 1st note in the $450,000 range? Would 6% simple interest for 1 year, renewable for another year make sense if my partner is a close friend?
Ido these types of deals all the time. You can definitely offer a note and deed of trust for the investment vs a syndication or JV. That would be the cleanest simplest structure for a deal like this. Once you decide on the terms of the investment with your investor then get with your attorney to draft all the documents etc.
Investor · Apex, NC · Member since 2018 · 253 posts · 215 votes
6y
@Josh Thomas yep, that's exactly what you would do (partner acts as the bank and provides a note, secured by the property itself, in first deed position).
However, a word of caution on this point:
> After building has been stabilized in 3-6 months
It's going to take a lot longer to take apartments at 10% occupancy up to 90%+ and fully stabilized. It will probably take at least a year to do necessary rehabs, get occupancy up and then you need to have it "season" for 6mo to a year for the banks to feel confident enough to provide you with financing so you can cash out. Just make sure you've been conservative with your timeline, would hate to see you lose the property because you didn't allow for more things to go wrong on the stabilization front.
Lender · Boca Raton, FL · Member since 2014 · 1k+ posts · 957 votes
6y
@Josh Thomas, I could make an introduction to bridge lender, as that seems to be the type of relationship you're looking for. Let me know if that would be helpful.
Specialist · Earth 2.0 · Member since 2019 · 598 posts · 271 votes
6y
I would look at if there's any upgrades that need to happen to the property. Also see why is occupancy at 10%. You can structure the deal as a private lending situation or get a couple investors into the deal everyone puts in a third of the needed funds and each one owns one third of the property