Creative financing for purchasing a fully rented multifamily building

[Luke Sirois]

I don't have much capital. 

I found a multifamily unit which is fully rented, it is 1.65m for the entire thing and it generates ~20k/m. The NOI is not bad on it and it seems like an outstanding deal.

My thought process as a first time buyer is that I can find someone to pay the downpayment in full in exchange for a high return (like 2x in -10yr) or something similar, and then take out a dncr, run the place. 

My purpose of posting this is to ask; have you ever financed your down payment? Is it viable in a situation like this? Where are you finding people to finance your downpayment?

Is buying a fully rented building a good strategy? I understand that this will come with a learning curve and I plan on doing my due diligence in regards to inspecting the neighborhood, the building (with a 3rd party inspector who knows what they are doing), and the documentation of costs and revenue. 

Where do you guys find your buildings in the world of multifamily apartments?

[Matthew Bernal]

That’s actually a pretty common challenge when moving into larger multifamily deals for the first time — finding the deal is one thing, but structuring the capital stack is the real game.

In my experience, a lot of investors finance deals like this by combining:

• DSCR or commercial debt
• Equity partners/private investors
• Sometimes JV structures instead of funding the down payment personally

A fully rented building can absolutely work as a first deal if the numbers, reserves, and management plan make sense. The biggest thing is making sure you’re not underestimating repairs, vacancies, or operational costs just because it’s stabilized today.

I work with investors on the financing/structuring side for multifamily and portfolio growth, so happy to compare a few ways people typically put deals like this together.