I am a general contractor/RE investor. I currently have 18 single family properties and would like to get into multi family. This property is owned by another contractor that is retiring. It is very well maintained. It is adjacent to our local college, so the vacancy rate is very low. It has an approx. $40,000 NOI and 13.6 Cap. I have not made an offer yet. They are asking $350,000 but I heard they will take $300,000.
I am looking to refinance an existing commercial building I have for the down payment. Last appraisal I had it was worth around $130,000. I don't know what is the best way to finance or most realistic. Private money, or long term (which I think is what I want) There are so many financing companies out there. I would appreciated any recommendations or advice I can get.
Seller money is usually very good money. So first you can start by seeing if they are open to seller financing as a possibility. Let them know you can save them on taxes because their cost basis for their property is probably very low and they will end up taxed on most of it and only net something like $200k. Current bank CD rates is only 2% and if they invested that $200k after the sell they'd only make $4k a year or so. So offer them $25k down and 5% on the remaining $325k. They'd cash flow $16k a year instead. And you'd make $24k (assuming that NOI is a good number), which comes out to nearly 100% COC based on your $25k investment.
You could also bring in a JV partner who would supply the money since you found the deal and will manage it for 50/50 split.
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