#Multifamily #Vendor #Financing #Apartment 

Hello ! Help required PLEASE??

MY PROBLEM...I am a equity lender only. I However have been offered several buildings at 70k to 100k per door. Some 4plex, 9 and 12 suite buildings around Alberta.

I am thinking about partners, maybe a few in each of the smaller centres that these places are located. What is partnering like for everyone else?

Do you put in extra for repairs right away? What is a good CAP in Alberta?

Does anyone know about separating the titles and selling them?

I'm looking for any info anyone can give...I lend mortgage funds based on equity to date only...I'm really needing help to make a decision on what seems like a great opportunity because they come with bank and a vendor second to make my cash down a lot less. 

1. This seems like a high price per unit.

2. You should definitely retain a reserve for repairs/vacancy/etc.

You typically can't separate the units and sell them individually unless they are townhomes (side-by-side units) and the zoning allows for it.

Thank you Sir. How much reserve on say a 9 or 12 unit building? Is there a formula based on rental gross income? Or any formula?

@Rick Laszlo lots of folks with completely average or below multi’s expecting full arv paydays in the prairies currently. Lots finding it difficult to refinance but still thinking they deserve top dollar. Tread lightly. Very little near term upside expected at the moment in the west. Don’t overpay (sounds like you’re about to) or you will be the next motivated seller in AB.

Thank you for that opinion I will take that under advisement...I was thinking along the same line… Like I said I can lend looking at an appraisal...I can see EQUITY LOL… I am not real familiar with being a landlord

Hi @Rick Laszlo,

As some of the other members mentioned, I would tread carefully with these opportunities right now in Alberta. Cap rates are quite compressed 4-6% in the larger markets and people in the smaller markets seem to be trying to get the same thing. The more rural the market like lacombe and medicine hat, the CAP rates should increase slightly and provide more cashflow.

I would suggest having quite a large reserve fund for repairs right off the bat, depending on the age and condition of the building obviously. If you're looking to partner with people on these, make sure they are local to these markets and have experience in the market as well as property management. I've looked at multifamilies in these smaller markets and the buildings can all look the same from the outside and walkthrough, but depending on how they were managed have completely different reputations around town and tenant profiles. The smaller markets really have tight rental rates and raising the rent $25/month can push people away quite easily. The size of these will also require a lot of property management and attention so make sure your partner is ready for this, there is a live-in manager, or the market has reputable property managers available. 

Good luck,

Travis

@Travis Hewlettthank you. 9 suites aren't worth 800k enem if they come with 85% LTV financing ? I was just looking at less cash in made sense.

@Rick Laszlo the chances of 9 suites at $90k+/ door cash flowing at 85% LTV is right around the same as the chances Carrie Underwood will finally see it my way.

@Rick Laszlo I've been living in Red Deer for about 25 years now. PM me if you need opinions on the areas of town that these buildings are located. My fiance is a social worker involved in housing for the less than stellar citizens in town so I certainly know which buildings to stay away from. I can also help with Lacombe.