How would you negotiate this?

Question

I found a 22 unit apartment casflowing about $291 on actual numbers from the past 12 months. Its about 1m. Here is your scenario: you work a deal where you find a lender doing 75% First, and Seller carrying a 20% 2nd. You need to find 5%. You find a private investor willing to put down the $50,000 grand needed.

What terms would you seek to get with the investor putting the 50g's down? Length, Interest Rate, Etc. Would you do a JV, or just secure the note to the property and have your LLC as the soul owner?

Thank you

Richard Warren · Answer

That’s a whole lot better.  There are a number of creative mortgage people on this forum who should be able to give you some ideas.

8)

Calixto Urdiales · Answer

How long is the seller going to carry the 20% second and is there any way to get 80% financing from the lender? If not the interest rate on a $50,000 dollar loan I would imagine would be really high! So you might want to take that aspect into account, thank you for your time and have a wonderful biggerpockets day...

Richard Warren · Answer

$291 cash flow on a 22 unit complex is not much.  How are the numbers going further back?  One big maintenance item could wipe out that $291 for a long time.

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Anthony B. · Answer

Hi,

Sorry, I did a typo. Its $291 a door.

Anthony B. · Answer

I'm not aware of any lender that will do 80% and let me have the owner do a 20% carry back...if there is one I would like to do that. I'm not too afraid of the interest rate being 'high' for the 50k. After doing due diligence, and if the numbers have been consistent, there is margin for there being a good return for the investor.