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Creative Real Estate Financing

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Andrew Berg
  • Cupertino, CA
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Would a bank lend me money for a multi-family apartment building?

Andrew Berg
  • Cupertino, CA
Posted Nov 13 2014, 08:14

Hi all, I'm in the early stages of creating a REI investing plan, and to know whether a particular path forward is achievable I'd like to hear feedback whether this hypothetical scenario would get financing, either from a local/regional bank or commercial lender.

The Example Property

  • 45 unit apartment complex in western-PA
  • $2M purchase price
  • $500k down (25% LTV)
  • 45 units @ $44k/door
  • NOI $170k per year (1.8 DCR)
  • 30-year amortization @ 5% (just guessing. Not sure whether these terms are reasonable with the given 25% down)

The Buyer

  • $750k net worth
  • $100k/yr W-2 salary
  • $200k cash reserves after downpayment
  • No debt
  • No real estate experience

The plan would be for the first 6-mo to 1-yr to hold down the W-2 job and use property management until things have stabilized and I'm comfortable with returns. Then quit the W-2 job and become a full-time property manager. So the question is... can I expect to finance something like this? The above scenario is based on this property, with the numbers rounded for simplicity.

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