Creative financing for purchasing a fully rented multifamily building
Member since 2026 · 4 posts · 0 votes
Creative financing for purchasing a fully rented multifamily building
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Matthew BernalBusiness Member
Investor · Austin, TX · Member since 2021 · 497 posts · 126 votesThat’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.
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- Lender · Lake City, MI · Member since 2019 · 118 posts · 42 votes4moHere are my gut reaction thoughts 1. There is always a reason someone is selling. It is usually a challenge that they are facing. I would recommend finding out if that challenge is a result of it being fully rented or something else completely. That will change your strategy 2. You can go a couple ways when financing a deal like you are talking about: getting someone to provide private money for the downpayment, or getting the seller to do a 2nd position seller financing. 3. 1.65m - 240k/year gross? Lots of variables but you will probibly be in the 120-180k/year operating costs. I would recommend being very confident on those numbers. 4. You didn’t mention how many units. Financing changes at 5 units and at 10+ units
- Member since 2026 · 4 posts · 0 votes4mo
Quote from @Bryce Fairburn:
Here are my gut reaction thoughts 1. There is always a reason someone is selling. It is usually a challenge that they are facing. I would recommend finding out if that challenge is a result of it being fully rented or something else completely. That will change your strategy 2. You can go a couple ways when financing a deal like you are talking about: getting someone to provide private money for the downpayment, or getting the seller to do a 2nd position seller financing. 3. 1.65m - 240k/year gross? Lots of variables but you will probibly be in the 120-180k/year operating costs. I would recommend being very confident on those numbers. 4. You didn’t mention how many units. Financing changes at 5 units and at 10+ units1. Yes, my gut reaction was also skepticism on why someone would sell a property which is doing so well. I have not been in the game long enough to know why it may be.
2. They explicitely stated they will not accept seller financing or creative financing.
3. NOI is not stated however the cap rate is 11 and the cash on cash ROR is 22.8 after debt service.4. The building is a 15 unit.
I really appreciate your insights.
- 4moJ CastroBusiness MemberLender · Florida · Member since 2025 · 684 posts · 246 votes
Hi@Luke Sirois, welcome to BP!
From a lender’s perspective, financing the down payment is possible, but it needs to be structured correctly.Most commercial and DSCR lenders want to see that the equity in the deal is coming from the borrower or a true equity partner—not borrowed funds that create additional debt obligations. If someone is contributing the full down payment, they would typically be brought in as an equity partner rather than a lender.
For example, if an investor contributes the down payment in exchange for a preferred return and a share of the profits, that is a very common structure in multifamily acquisitions.
Buying a fully occupied property can be a great first investment because the cash flow is already established, but lenders will still verify the rent roll, trailing 12-month operating statements, leases, and property condition to make sure the income supports the loan.
The most important factor is whether the numbers truly work after accounting for vacancies, repairs, management, taxes, insurance, and reserves.
As for finding deals, most multifamily investors source opportunities through commercial brokers, direct outreach to owners, and networking with local operators.
If the NOI is strong and the property appraises well, this could be a very financeable deal with the right partnership structure.
- 4moMatthew BernalBusiness MemberInvestor · Austin, TX · Member since 2021 · 497 posts · 126 votes
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.
- Investor · Hendersonville, NC · Member since 2016 · 498 posts · 285 votes4mo
Quote from @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?I’d slow down a bit on this one.
If it’s a 15-unit at $1.65M with $20k/month gross and the seller won’t do seller financing, then the real question is not just “can I raise the down payment?” It’s whether the numbers still work after a lender, partner, reserves, repairs, management, taxes, insurance, vacancy, and your learning curve all get paid.
Also, a fully rented building can still have problems. Bad tenants, under-market rents, deferred maintenance, old leases, collections issues, capex coming due, or expenses that are understated.
If you bring in someone to fund the down payment, they're probably not just a lender. They're an equity/JV partner, and that means you need a structure where they get paid, the bank is comfortable, and the deal still has enough margin left.
I'd want to see the actual T12, rent roll, leases, utility setup, insurance quote, tax situation after sale, unit condition, and debt terms before getting too excited about the advertised cap rate. This could be a good deal, but don't get ahead of yourself. - Realtor · Granbury, TX · Member since 2026 · 7 posts · 3 votes4mo
I would be careful not to let “fully rented” do too much work in the analysis.
It is a good sign, but it does not automatically mean the building is stable. I would want to see whether the advertised income lines up with the rent roll, leases, T12, and actual operating expenses before leaning too hard on the cap rate or cash-on-cash number.
The financing side has already been covered well here. From a buyer-advisor standpoint, I would slow the deal down long enough to prove the income, the expenses, and the exit plan. If the only way the purchase works is by stretching the down payment structure, the margin probably needs a second look.
A fully occupied building can be a good strategy, but only if the occupancy is supported by clean numbers and a property you are ready to operate.
- Specialist · I give advice - [email protected] - I focus on states where investing is profitable, reasonably safe & secure · Member since 2026 · 63 posts · 13 votes6d
Quote from @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?Creative financing is what we do but we're well funded. I would not recommend getting in since you state "I don't have much capital." It costs a lot of capital and expertise to extracate your self from an underfunded investment like real estate.
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