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