Colonial Hotel and Tavern Zoned for 8 Units

6 Replies

Hi everyone,

I’ve been following bigger pockets content for over 5 years now. I’m in the Boston area, with a concentration in the north shore.

I’m currently trying to acquire an 8 unit Colonial. It needs some restoration but overall in fantastic condition for an 1800 build.

This is my first deal and I’m looking for financing.

Has anyone successfully raised 100% of the funds for their deal?

How did you structure the deal for the investors?

I’m always eager to help and provide as much value as I can.

Any advice anyone is willing to provide would be greatly appreciated.

Hi @Paul Ivnitskiy - I've never successfully raised 100% of the funds for a deal. It's a pretty universal truth that any lender will want you to have skin in the game. I've read about people doing 100% financing from time to time. All the effort to find a deal where 100% financing works would be better spent saving up for a deal where you can qualify with a reasonable down payment, IMHO.

Now, if it's a really spectacular deal, you may want to bring in a partner who can help with the funding, or borrow money from friends/family, but none of these options would appeal to me in a normal world. 

Congrats on finding something you really like. It's a big part of the challenge, especially in a seller's market.

Originally posted by @Paul Ivnitskiy :

Hi everyone,

I’ve been following bigger pockets content for over 5 years now. I’m in the Boston area, with a concentration in the north shore.

I’m currently trying to acquire an 8 unit Colonial. It needs some restoration but overall in fantastic condition for an 1800 build.

This is my first deal and I’m looking for financing.

Has anyone successfully raised 100% of the funds for their deal?

How did you structure the deal for the investors?

I’m always eager to help and provide as much value as I can.

Any advice anyone is willing to provide would be greatly appreciated.


Paul, 

Every deal needs cash. It might not be your cash. So, 100% is possible and in exchange, you would not be in 100% control. 

Think of it this way. If you want me to put up all the cash and shoulder all the financial risk, I should get 100% of the profit. You might counter that you found the deal and will be running things. So, we need to find a compromise in the middle. 

When you have zero cash in, what will keep you motivated to show up and finish the project? If the work starts going off track and there is not going to be a profit, would you stay or move on to something which has a possible profit? The party putting up all the cash is stuck yet you could walk away. Other than a credit hit, what stops you from bailing?

Skin in the game is sometimes referred to a ‘hurt money’. So you feel financial pain if your projections and management of the project let the team down. 

BTW, I grew up in the North Shore of MA. A great area to live with some cool buildings. 


 

Hi Paul,

I completely agree with @John Corey . If I'm an investor, what's your pitch? You found a great property -- wonderful. I'm happy to pay a finder's fee. What skills and experience are you bringing to the table?

Additionally, what terms are you looking for? Do you want a short, 3-6 month bridge loan? Are you expecting a 30 year fixed loan while you manage the property and pay mortgage payments?


Keep in mind, when you have a property with more than 4 units, banks view the property as commercial and the underwriting proves is very different than residential properties. For a commercial property they will expect a larger downpayment, some sort of business plan and a track record or a partnership with somebody that has a track record.