Advice on structuring a deal with an investor for the first time.

2 Replies

I started by reading this, 
https://www.biggerpockets.com/blog/structure-private-loans-interview

There are so many ways to finance a deal. I'm trying to step up in scale so I'd like to buy more property than I can on my own. I'm targeting a 12-unit building and I have two properties under my belt.

One is a 4-plex. The other is mixed use storefront with apartments above - two suites + 4 apartments. The third property I would like to acquire is a 12-unit apartment building. My goal would be to buy and hold. 

Some assumptions:
Purchase price $300,000 - Renovations 40,000 - ARV 510,000 - GR 95,000 - NOI 55,000

So, is this a viable structure? Get an investor for the full amount and pay them fixed interest of 10% lump sum. They get protections with the mortgage and the money goes into escrow. I complete the renovations and bring it up to full occupancy, let it season for 6 months. Then my commercial lender refinances for $375,000 (75% LTV based on 12% cap rate). $375,000 goes back to the investor. And then... I own the property with a $375,000 mortgage.

I'm looking for any feedback. Broad strokes do I have the general idea? Is this a good deal for the investor? me? I'm just trying to keep my momentum and you great people are part of that.

#cincinnati



Timeline would be 1 year. Acquisition date, 6 months of work and leasing, 6 months on the vine for the lender, refinance, pay the investor.

The property this is based on is under contract now. An offer went in same day. I'd still like feedback on how this could play out on my next deal.

What if you had the investor just pay the down payment and sign for the loan to purchase? Then when you refi you pay off the purchase loan and they get down payment back plus 10%?