How do I finance 6 buildings?

Question

Jason Smith · Answer

I think the biggest issue is the property manager, he won't respond to the realtor to show the properties....  He looses his job if they sell.   They aren't in good enough shape to pick the best building to buy and there are too many unanswered questions.....  the big time lawyer owner won't release any information.

Thank you all for your time and information!

Sandy Salazar · Answer

@Michael Noto is correct, you want to check the laws in the area and see what was hindering the landlord, you don't want to be in the same boat as him once you purchase.  What kind of buildings are these, you said they are 6, are they residential?  Can you split the sale into a duplex and fourplex?  It might be easier to qualify for fourplex investment instead of commercial because they don't look at the vacancy rate as much.  Just a thought.  I hope you keep us posted, would love to know how this deal ends.  Good luck!

Jeremy Pace · Answer

@Jason Smith

Two things.

First, the bank is unlikely to lend you money in this case for a couple reasons.  Even an actual commercial banker (a banker that might give you a package deal, or finance all this investment property into one loan) is going to want 20% down and six months PITIA in reserve, which it sounds like you don't have.  The nail in the coffin is the 50% vacancy.  Unless you pay less than 50% of the appraised value for the property, a bank isn't going to touch it.  It's difficult enough to get them excited about scenarios with 100% occupancy unless you already have an incredible relationship with them.

Second, if your uncle can possibly help you get creative, that would be a good route.  Perhaps you and your uncle could join forces to come up with a seller finance option that gets you both what you want.

Michael Noto · Answer

You might want to check into what local laws were hindering this out of state landlord as well.

James Wise · Answer

Bank likely will not be interested due to the high vacancy rate.

Your uncle sounds like your best bet.

Brent Paul · Answer

Have you considered possibly doing seller financing or bringing in another investor to help with the downpayment?