Need a lot more info on your deal. Where is prop, what is asking price, is it FSBO, is it in foreclosure, what is the size of the unit, how many apts. Info like that...Jan
Would like more details as my partner Jan asked, is it something you are looking at or are you asking just in general? We get the owners to finance for us and that is how we get multi family units.
Jeremy
__________________
This train, Dreams will not be thwarted
This train, Faith will be rewarded
Big wheel roll through fields where sunlight streams
Meet me in the Land Of Hope And Dreams
I am looking at a 10 unit apartment building REO that has been listed on loopnet for about 8 months. 3 of the units
in need of some repairs, kitchen cabinets, AC wall units and bathroom tiles. How do you aproach the Bank?
Unless you have at least 20% to 30% down, the banks won't look at you. If you do have that type of money then go to your local bank and start the process.
Really need more info about your deal before I could give you some pointers....Jan
I found a distress 142 apartment building on Loopnet. The broker is CB Richard Ellis. The cap rate on this property is 10%. The property is worth 3.1 Million.
Now, I would like to hopefully purchase this property with nothing down. that is my goal. Do you have any tips? Anything would be greatly appreciated.
Hello:
To do a no money down on multi-family or apartments, you would have to arrange a 15-20% seller financing option or more depending on what the seller agrees to do with you.
The higher the cap rates, the more risk in the property, so you should definitely talk down the price of this property, since it is distressed.
If you are looking into multi-family that are stabilized and income producing, you should look into non-recourse conduit lenders who can put up between 80-90% loan to value and whatever is remaining you can do a seller financing. Non-recourse loans are only available for stabilized properties that have a healthy cash flow, since it is the performance of the asset, which determines the lender if they will lend to you. Non-recourse conduit loans does not require any personal guarantees, so they will not go after your personal assets if you default on the loan. Their guarantee is the income producing asset.
I have the same question, except I am trying to get more educated on master lease options. I have the perfect property to try it on but don't fully understand how it's done. I have a 16 unit apartment building under contract but I don't have a buyer yet. The seller owes $395K on an existing mortgage making interest only payments; the mortgage is Not assumable. I can buy it from him for $415K. I keep hearing about this master lease option and I need to know how I can use it for this particular situation and what documents do I use.
Daphne:
How would one go about finding these non conduit lenders? Can you find them through your local bank or is it a totally different animal?
Thanks
-M
daphnedeehill wrote:
Hello:
To do a no money down on multi-family or apartments, you would have to arrange a 15-20% seller financing option or more depending on what the seller agrees to do with you.
The higher the cap rates, the more risk in the property, so you should definitely talk down the price of this property, since it is distressed.
If you are looking into multi-family that are stabilized and income producing, you should look into non-recourse conduit lenders who can put up between 80-90% loan to value and whatever is remaining you can do a seller financing. Non-recourse loans are only available for stabilized properties that have a healthy cash flow, since it is the performance of the asset, which determines the lender if they will lend to you. Non-recourse conduit loans does not require any personal guarantees, so they will not go after your personal assets if you default on the loan. Their guarantee is the income producing asset.
I am not an attorney and you should seek advice for this from a qualified real estate attorney.
The MLA will be used with a PSA. The property owner cant sell the property, it has mgmt problems, high expenses, low NOI, low occupancy, high capitol repairs, bad location lower type property in a higher type property area...etc. You structure the terms of the MLA and the PSA similar to what youd do for a seller finance deal, in your favor and at a price that is acceptable to the seller. MLA's only work with 100% seller financed ddeals, and the current owner can have existing financing, doesn't have to own the property free and clear. WATCH OUT IF THE SELLER REQUIRES A DOWN PAYMENT!
Another option is to wrap the current loan with a seller finance type deal and take title to the property. Be careful about down payments with seller finance deals as you the buyer have no legal recourse to claim any money as you are not on title, if the seller happens to default and foreclose. Check with your attorney before doing this kind of a deal!
The idea is to control the property for a length of time to improve the value of the property, either by reducing expenses, making repairs, increasing occupancy, creating income producing amenities...etc. At the end of the MLA period then a refi comes in and the PSA goes into effect and you buy the property. The key element is to buy the property in the original negotiation at a price you analyze to be the likley price you'd be willing to pay and be able to create enough room for the increase in equity to cover the purchase without coming out of pocket or the reserves.
Another advantage in creating MLA deals is you get 3-5 years to increase your credit,build business credit and keep the property debt off of your credit report and business or financial statement. By the time the MLA expires you should have enough business credit built up to cover any shortfalls you may realize when you refinance. The cash flow should pay that cost. Don't kill the equity in the property. You'll possibly lose it if you do.
How does lowering the offer price lower the cap rate?
For Example: If you have set Gross I & E and you have then an established NOI, by lowering the price of the property you would increase your NOI and the DCR. That would also increase your Capitalization Percentage, your cash flow would improve instantly. (I agree that high CAP rates are risky especially if they approach 20% or more.) But at the same time it should increase the DCR and would be more attractive to financing. If you leverage high into a property then the DCR would be too low if the CAP rate was low too. Anything less than a 8.5% CAP with little down would result in too low of a DCR to obtain financing.
This is only my opinion and would love to read your reply.
Need help or info on purchase of apartment buildings.
Hello,
This is my first post and it;s in the form of a question.
First the facts:
I have poor credit am unemployed and my unemployment is about to run out. I own my own home, mortgaged with about 35K equity in it as the current value goes.
I found a 16 unit rental property that's about to be auctioned off but contacted the listing agent to propose she contact me if they didn't get a high enough bidder after the auction.
To my surprise, she emailed me back within a few hours and asked if I was able to purchase close to the asking price. She would put in the offer and they would forgo the auction.
The note is 450K and asking is 599K. She thinks the two owners would accept 550K and they just want to cash out so won't hold the note.
All but one tenant has been there for longer than a year and all units except one is rented.
Current gross income is over 90K a year and net income over 50K a year.
The apartment units are close to a university and downtown a city with ample public transportation available close by.The units inside and out are in very good condition.
This is a deal of a life time for me as it would keep me from loosing my own house and allow me to keep feeding my family of five.
Is there any way I could buy this property and start my dreams of being a real estate investor?
Anyone, please help as time is of the essence.
Thank you
1st thing to do is learn about what you are thinking of buying and how you can buy it! Donald Trump University has a book called Commercial Real Estate Investing 101. By David Lindahl. Get it! Read it! You will need no other information, its all in that book! You think Donald knows about Commercial real estate? Multi family over 4 units are considered commercial not residential.
Any thing that has been on loopnet over one week is overpriced. The real deals get taken before they get there.
Most cash investors like a cap rate of 8.0 to 13.0
Finally, no credit, no money will usually take a private money investor. Which brings me back to my first statement
Hope this helps!
Michael Mangham
MD Home Acquisitions LLC
__________________
Knowledge is power, but execution trumps knowledge. Tony Robbins
nowadays you need at least 25% down AND a personal guarentee! its just not the best time to be buying even though prices are cheap- i would also recommend you join **** , its free and is a great tool that thousands of investors use.
Does anyone have any idea about Multi-family investment? Commercial rental properties. I ran across a guy named Lance Edward promoting his course for investing in Multi-family. I'm very interested, but not so sure how promising is the course. I know Dean's courses always over deliver what he taught.
Please advise!
Michael, you always give valuable info and straight to the point. I really appreciate all your knowledge and generosity in sharing. Thank you!
Is this deal still available to you ? If it is I would do the following. I understand the mortgage isn't assumable by bank standards. Put that aside for a moment. I would have the owner assign the deed to you for the 395,000 for 2 years. The bank doesn't care who pays the monthly mortgage as long as there getting paid. Next I would work out a payment schedule say $1,000 monthly until yu have paid the $20,000 off. At the end of the 2 years refinance the property into your name.
With this concept the owner signs the deed over to you NOT the mortgage. The mortgage stays in there name. BUT you get the tax right off.
You have 2 years to stabilzed the property or sell it for a profit
I would do deals like this all day long. Good Luck
Offline
Need a lot more info on your deal. Where is prop, what is asking price, is it FSBO, is it in foreclosure, what is the size of the unit, how many apts. Info like that...Jan
Would like more details as my partner Jan asked, is it something you are looking at or are you asking just in general? We get the owners to finance for us and that is how we get multi family units.
Jeremy
This train, Dreams will not be thwarted
This train, Faith will be rewarded
Big wheel roll through fields where sunlight streams
Meet me in the Land Of Hope And Dreams
Bruce Springsteen
I am looking at a 10 unit apartment building REO that has been listed on loopnet for about 8 months. 3 of the units
in need of some repairs, kitchen cabinets, AC wall units and bathroom tiles. How do you aproach the Bank?
Unless you have at least 20% to 30% down, the banks won't look at you. If you do have that type of money then go to your local bank and start the process.
Really need more info about your deal before I could give you some pointers....Jan
I found a distress 142 apartment building on Loopnet. The broker is CB Richard Ellis. The cap rate on this property is 10%. The property is worth 3.1 Million.
Now, I would like to hopefully purchase this property with nothing down. that is my goal. Do you have any tips? Anything would be greatly appreciated.
Thanks
Hello:
To do a no money down on multi-family or apartments, you would have to arrange a 15-20% seller financing option or more depending on what the seller agrees to do with you.
The higher the cap rates, the more risk in the property, so you should definitely talk down the price of this property, since it is distressed.
If you are looking into multi-family that are stabilized and income producing, you should look into non-recourse conduit lenders who can put up between 80-90% loan to value and whatever is remaining you can do a seller financing. Non-recourse loans are only available for stabilized properties that have a healthy cash flow, since it is the performance of the asset, which determines the lender if they will lend to you. Non-recourse conduit loans does not require any personal guarantees, so they will not go after your personal assets if you default on the loan. Their guarantee is the income producing asset.
I hope this helps...
thanks,
Daphne
I thought the higher the cap rate, the better?
I have the same question, except I am trying to get more educated on master lease options. I have the perfect property to try it on but don't fully understand how it's done. I have a 16 unit apartment building under contract but I don't have a buyer yet. The seller owes $395K on an existing mortgage making interest only payments; the mortgage is Not assumable. I can buy it from him for $415K. I keep hearing about this master lease option and I need to know how I can use it for this particular situation and what documents do I use.
Daphne:
How would one go about finding these non conduit lenders? Can you find them through your local bank or is it a totally different animal?
Thanks
-M
To do a no money down on multi-family or apartments, you would have to arrange a 15-20% seller financing option or more depending on what the seller agrees to do with you.
The higher the cap rates, the more risk in the property, so you should definitely talk down the price of this property, since it is distressed.
If you are looking into multi-family that are stabilized and income producing, you should look into non-recourse conduit lenders who can put up between 80-90% loan to value and whatever is remaining you can do a seller financing. Non-recourse loans are only available for stabilized properties that have a healthy cash flow, since it is the performance of the asset, which determines the lender if they will lend to you. Non-recourse conduit loans does not require any personal guarantees, so they will not go after your personal assets if you default on the loan. Their guarantee is the income producing asset.
I hope this helps...
thanks,
Daphne
I am not an attorney and you should seek advice for this from a qualified real estate attorney.
The MLA will be used with a PSA. The property owner cant sell the property, it has mgmt problems, high expenses, low NOI, low occupancy, high capitol repairs, bad location lower type property in a higher type property area...etc. You structure the terms of the MLA and the PSA similar to what youd do for a seller finance deal, in your favor and at a price that is acceptable to the seller. MLA's only work with 100% seller financed ddeals, and the current owner can have existing financing, doesn't have to own the property free and clear. WATCH OUT IF THE SELLER REQUIRES A DOWN PAYMENT!
Another option is to wrap the current loan with a seller finance type deal and take title to the property. Be careful about down payments with seller finance deals as you the buyer have no legal recourse to claim any money as you are not on title, if the seller happens to default and foreclose. Check with your attorney before doing this kind of a deal!
The idea is to control the property for a length of time to improve the value of the property, either by reducing expenses, making repairs, increasing occupancy, creating income producing amenities...etc. At the end of the MLA period then a refi comes in and the PSA goes into effect and you buy the property. The key element is to buy the property in the original negotiation at a price you analyze to be the likley price you'd be willing to pay and be able to create enough room for the increase in equity to cover the purchase without coming out of pocket or the reserves.
Another advantage in creating MLA deals is you get 3-5 years to increase your credit,build business credit and keep the property debt off of your credit report and business or financial statement. By the time the MLA expires you should have enough business credit built up to cover any shortfalls you may realize when you refinance. The cash flow should pay that cost. Don't kill the equity in the property. You'll possibly lose it if you do.
BE GOOD TO YOURSELF AND OTHERS TODAY AND ALWAYS
...here who can explain what "MLA" and "NOI" are to us newbies? I'm assuming PSA = Purchase and Sale Agreement, yes?
Follow my Journey: http://www.deangraziosi.com/real-estate-forums/investing-journals/55360/...
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"This is me taking back control of my life...what the xoxo have you done lately?" ~Wesley Gibson, Wanted
How does lowering the offer price lower the cap rate?
For Example: If you have set Gross I & E and you have then an established NOI, by lowering the price of the property you would increase your NOI and the DCR. That would also increase your Capitalization Percentage, your cash flow would improve instantly. (I agree that high CAP rates are risky especially if they approach 20% or more.) But at the same time it should increase the DCR and would be more attractive to financing. If you leverage high into a property then the DCR would be too low if the CAP rate was low too. Anything less than a 8.5% CAP with little down would result in too low of a DCR to obtain financing.
This is only my opinion and would love to read your reply.
BE GOOD TO YOURSELF AND OTHERS TODAY AND ALWAYS
Hello,
This is my first post and it;s in the form of a question.
First the facts:
I have poor credit am unemployed and my unemployment is about to run out. I own my own home, mortgaged with about 35K equity in it as the current value goes.
I found a 16 unit rental property that's about to be auctioned off but contacted the listing agent to propose she contact me if they didn't get a high enough bidder after the auction.
To my surprise, she emailed me back within a few hours and asked if I was able to purchase close to the asking price. She would put in the offer and they would forgo the auction.
The note is 450K and asking is 599K. She thinks the two owners would accept 550K and they just want to cash out so won't hold the note.
All but one tenant has been there for longer than a year and all units except one is rented.
Current gross income is over 90K a year and net income over 50K a year.
The apartment units are close to a university and downtown a city with ample public transportation available close by.The units inside and out are in very good condition.
This is a deal of a life time for me as it would keep me from loosing my own house and allow me to keep feeding my family of five.
Is there any way I could buy this property and start my dreams of being a real estate investor?
Anyone, please help as time is of the essence.
Thank you
1st thing to do is learn about what you are thinking of buying and how you can buy it! Donald Trump University has a book called Commercial Real Estate Investing 101. By David Lindahl. Get it! Read it! You will need no other information, its all in that book! You think Donald knows about Commercial real estate? Multi family over 4 units are considered commercial not residential.
Any thing that has been on loopnet over one week is overpriced. The real deals get taken before they get there.
Most cash investors like a cap rate of 8.0 to 13.0
Finally, no credit, no money will usually take a private money investor. Which brings me back to my first statement
Hope this helps!
Michael Mangham
MD Home Acquisitions LLC
Knowledge is power, but execution trumps knowledge. Tony Robbins
http://www.mdhomeacquisitions.com Seller site
http://www.mdhomeacquisitionsbargainhouses.com Buyer site
http://www.mdhomeacquisitionshousehunter.com Bird Dog Site
http://www.mdlodeals.com Tenant/Buyer site
Thanks for the advice. I'll look into it.
nowadays you need at least 25% down AND a personal guarentee! its just not the best time to be buying even though prices are cheap- i would also recommend you join **** , its free and is a great tool that thousands of investors use.
Does anyone have any idea about Multi-family investment? Commercial rental properties. I ran across a guy named Lance Edward promoting his course for investing in Multi-family. I'm very interested, but not so sure how promising is the course. I know Dean's courses always over deliver what he taught.
Please advise!
Michael, you always give valuable info and straight to the point. I really appreciate all your knowledge and generosity in sharing. Thank you!
Li
Never Give Up!!!
Is this deal still available to you ? If it is I would do the following. I understand the mortgage isn't assumable by bank standards. Put that aside for a moment. I would have the owner assign the deed to you for the 395,000 for 2 years. The bank doesn't care who pays the monthly mortgage as long as there getting paid. Next I would work out a payment schedule say $1,000 monthly until yu have paid the $20,000 off. At the end of the 2 years refinance the property into your name.
With this concept the owner signs the deed over to you NOT the mortgage. The mortgage stays in there name. BUT you get the tax right off.
You have 2 years to stabilzed the property or sell it for a profit
I would do deals like this all day long. Good Luck
Adam Negri