Financing on a few small apartment deals

[zlutz1]

Hi, I am looking to finance 3 small apartments deal 2 12 units and one 10 unit. 2 of the deal are 80/ with seller carrying 20%, the third is still 80 % but the seller is rebating the 20% back to me for repairs to the complex. I dont have good credit , actually very little credit. I am looking for suggestions on how to go about finding financing for these deals? Any input will be greatly appreciated thanks

[zachj]

Where are these properties?  And what are the loan amounts?

[zlutz1]

they are located in illinois

[donmcclain]

Are you going to put in any cash? You may still need closing and financing costs.

[gordo2417]

Like I say on alot of my posts...........visit a local bank in town.  Visit with the commercial lender for that bank is these deals are commercial and not residential.

Nate-WI

[donmcclain]

With seller concessions you should be able to get 5% down

75% first
20% seller second
5% down

[gordo2417]

BTW...........don't put a dime into the deal if you don't have to.  I see how you are doing that already with seller financing.  You can do commercial deals without any of your money.  I'm buying an 8-plex with none of my money and will walk out of closing with an escrow check.  

Nate-WI

[christopher w]

Gordo,

After reading many many posts from people on this board that have provided a lot of very good information; the consensus seems to be that there is no such thing as 100% LTV financing in commercial lending. I myself have spent hours looking for it. Can you provide me with the scenario that you described in your previous posting. I mean this in all seriousness. I have looked long and hard for scenarios that I can use for myself and my customers. Please advise.

[gordo2417]

Chris,

Here is my current situation on an 8-plex that I have agreed to buy for 270K with none of my money.  The lender that I'm working with just did a no down deal for me although that was on a duplex which as I understand is much more easier to get accomplished.  I asked them if they were willing to take this deal on as I knew they were a more creative bank than most.  

The 8-plex has a tax assessment value of 310K as of 2005.  It should appraise at 340-350K based on comps provided by my realtor thru Coldwell.  Lots of factors that play into this..........character, credit, job, DTI, etc.  I told this lender that I do zero down deals.  Since the seller of this property does not want to hold a second to get me to my LTV requirement (80%) I asked the lender if they lend based on APPRAISAL VALUE versus what I am buying it for.  They said yes they do.  I just dropped off the Sch. E's today as they are still running their cashflow numbers to make sure that, besides the equity, they feel comfortable with the deal.  I told them my plan of attack on the property as far as rents go (raising rents on the month to monthers and filling the one vacant unit before the end of May)

So they lend on appraisal value versus what the sales price is which is a rather unique way of buying commercial property.  The bank would not be wasting their time with me if they weren't serious about doing a deal like this or if they had not done one like this before.  If it doesn't work for this one at least I know what their requirements are so I can present them a different deal down the road.  So if the appraisal comes in at 340K then 80% leaves me with a loan amount of 272K as to which they can loan.  Plus the seller is kicking in 8K towards closing costs and with a small bank that should cover that and then some.  They are investor friendly so they know what to look for and what is a good deal and what is not.  So that's my story anyways.  Hope this helps,

Nate-WI

[christopher w]

Gordo,

That is absolutely fantastic. I have started looking at small banks for a lot of my interim construction business, as well as helping builders set up lines of credit. I never thought to ask about whether in a commercial deal they will use appraised value versus aquisition cost. Might I assume that you have stellar credit and are going full doc?

[gordo2417]

My middle score is a 740 and absolutely they want full doc.  Wouldn't stated be nice  You caught my attention with lines of credit.  I have some of those but always looking for more.  Care to share?  Feel free to e-mail or call me off the board if desired.  Otherwise see you on the posts.

Nate-WI

[tschwartz1]

If your looking for financing, you might look to partner up with other Real Estate investors.  

I work with over 100 different investors so that when these deals come around, someone will generally want a piece of the action.

Good Luck and let me know if you need some introductions.

Tony

[aowilkin]

Gordo,

Who paid for the appraisal?  Did you pay for that out of pocket or did your bank cover that cost upfront for you?

[gordo2417]

It was part of closing costs.

Nate-WI