Multifamily Financing plan

[dtownry]

Need some advice on a multifamily financing plan I have to see if it is going in the right direction.  I am planning on going under contract soon.

Ok here is the basics.

Apartment  complex to buy

me and one other partner are purchasing it.

decent 8 cap...with .01 % vacancy in 15 years...a class B building

Equity and cash flow split is as follows:
Me 55% (extra 5% to manage the property)
Partner 45%


I am going to refi my home which is fully paid for and pull out 65K for the downpayment.

My partner is paying the other 65K in cash

total downpayment =130K, owner carry back 10%

Now...i will use my monthly cash flow split to pay back the loan on my home and still make a few bucks

My partner will take her 45% cash flow per month

Question 1.  

At 5 years my proforma says we will have 522K in equity
The owner is carrying 10% 30 year fixed at 5.5 balloon at 5 years....
So I just refi at 5 years and pay that off correct?

Question 2.

I will plan on buying my partner out at some point probably 5 years as well.  At that point do we refi to pay off balloon and I also refi to pay off my partner and cash out her equity share?  Does this sound resonable.  I then assume full equity share and a new loan?

Question 3.  

Is it crazy to mortgage my free and clear home to come up with a downpayment???


Thanks you anyone who has advice on this deal!  I owe you one...

[4EEM]

Run the numbers with a 20 Year mortgage fixed for 5 years at 9%.  Look at the cash flow and then decide if it is crazy to cash out your home.

[dtownry]

Why would that help...can you explain?  Do I use the 20yr and figure in the owner's carryback or just one loan and see if the numbers work?  Thanks...

[4EEM]

Use the 20 Year 9% just on the lender financed amount.  Factor in the owner financing and the other costs of ownership.  What's the cash flow after computing all numbers?

[dtownry]

So I ran that scenario on 80 LTV of the purchase price
and no way does it make sense...can you tell me why you chose these numbers?

From what I see in my original numbers as stated above I can easily service both my first and second mortgage (owner's financing) and also pay the debt service on my personal Home Equity Loan and still have a cash flow.  

I don't understand where the 20yr at 9% comes into play...I have an I dea but still it doens't make sense

Am I just missing something here?

[dtownry]

Yea that won't service the debt.  Negative cash flow....

[Wes]

Are you still considering this Multi unit property?

If so, or even if you have another in mind, I think I can offer you some choices that might make the deal work.

However a few more details are needed to determine whether or not I could help.

Regards,