Help with ideas for big down payment.

5 Replies

I have just started researching a 49 unit apartment complex for sale in my area.  Begin by running the numbers through bigger pockets rent calculations, the property seems to be able to cash flow nicely.  Now moving on to my concern, that is hindering me at the moment.  The property is listed for $1,500,000, I think it might be high asking price I value the property at $1,200,000.  My issue is the down payment for a commercial loan.  Can anybody give me suggestions on ways of getting a 25% down payment for the property.  I currently have 8 rentals and am closing a 4 unit in May, but this type of investment will be my first at this amount.  Thanks for any help.

@John Craig ask the seller to hold a 2nd mortgage for the value of the downpayment.

A side note, a bank is going to want you to have at least six months PITIA in reserve ... if you don't have that, the down-payment won't metter.

@John Craig

Great job on finding a potential deal!

First, make sure it is truly a good deal. Hopefully your analysis looks something like this:


Gross Scheduled Rents
- Vacancy Allowance
- Concession/Bad Debt Allowance
+ Utility Reimbursement
+ Other Income
= Gross Income

Repairs & Maintenance
Property Management
Contract Services

Gross Income - Expense = NOI


Secondly, I would recommend partnering with an experienced commercial multifamily / apartment investor. If the numbers prove that it is a great opportunity, you can work to acquire private funding for the downpayment.

Good Luck!


Ashcroft Capital
A national multifamily investment firm
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@John Craig

Hi John

Have you considered a partner.  You can charge an acquisition fee to put the deal together and retain some amount of equity.  Once you acquire the property, charge a fee to manage.

You may be able to negotiate with the bank a smaller down payment.  20% is doable.

We just received 15% down on 156 units, so it can be done, just find a portfolio bank who is looking to grow and show them you will keep the deposits there.  Maybe tell them you will move all your buisness there for a deal.


Yes, I agree with Hubert in saying that you need to be sure that you are underwriting this more conservatively than what the broker is saying or even what the financials might say. Build a proforma with your DSCR numbers, which should at least be in the mid 1x's to be safe. Typically the bottom threshold for multifamily is 1.25x and that is for core class A product.

Also, when financing this it is important to have a strong relationship with your lender and be able to back up your experience as that will be an important part of them being comfortable with maintaining a property of that size. A good plan on the front end with a strong and supportive team will go a long way. Hope this helps and good luck!

Thanks for the tips, I have recently gotten lending from a local portfolio bank on a four unit, so it might be worth feeling them out for a much larger project.  I am also going to work harder finding a partner for this type of investment.  Also Hubert great saying at the end, mine is about the same Go Big or Go Home.