Buying Large Apt Complexes

tuckerga profile photo

I am currently transitioning out of a corporate career and am looking to buy an apt complex. Probably 100+ units. Have great credit and some cash. What I need to know is how to find lenders that are open to these investments. I'm just getting started so any advice on apts, lenders, do's and don't s would be appreciated.

Comments(11)

  • KyleGatton9th October, 2003

    Any commercial lender will do apartments. What you need to find out is who will do the most loan to value, so you dont have to put up all of your cash at closing. Any broker will shop the loan around for you for a fee if you dont want to waste your time learning the ins and outs of commercial mortgages. If you just want a general idea to get started, you should click the lenders tab at the top of this page and see there rate sheets. Just remember that you will have to find the right mix of down payment, LTV, percentage of value that they loan. The lenders here on the site are pretty good, if they cant help you let me know by sending a private message.

    Good Luck,
    Kyle

  • hibby769th October, 2003

    Variables to consider:

    Points. Some lenders will do it for 1, standard is 2-3, and some will ask 5-6. That's a BIG difference.

    Rate: obviously a half of a percent will make a big difference on your mortgage payment of 3-4 million.

    Ammoratization: shop around for 30 year ammoratizations. They're out there, but they're not common. Washington Mutual, I hear, does 40 year ammoratizations. PM me if you need any leads on these. Most banks will want to do 15 on the short end and 25 on the long end.

    Other variables will be the call, fixed vs variable, what they require you to do and provide, and how long they can get the money.

    I'd be VERY WARY about picking up any old loan officer off the street and using them. Many of them see big dollar signs with your deal, and will make you big promises, but they don't have good solid connections, they don't know their lenders well enough to know what you'll need to bring, and what they can actually do. Bottom line: Big hat, no cattle.

    Ask them about deals that they have done in the past and check references. Get referals. Trust me, I learned this lesson the hard way, and just about lost a great deal because of it.

    Feel free to PM me if you'd like. There are a lot fewer "apartment buyers" on this site (no offense meant to the house flippers out there). Perhaps I can help you out in other ways. When you PM me, include your email. Good luck.

  • GFous9th October, 2003

    Start getting some trade journals like MultiFamily. Look for lenders that specialize.

    Multi family investing is MARVELOUS. You can get non recourse money for units over 100.

    Gregg

    I can let you know who I use. PM me if you wish.
    [addsig]

  • flacorps9th October, 2003

    A lot of doctors bought multi-family in the 70s and first half of the 80s as a tax shelter.

    When you do that, and you've taken depreciation the whole time, a lot of times you've refinanced to the point where you can't really sell the complex because it's got very little remaining tax basis and there's so much debt you'd have to bring money to the table to sell it.

    The solution is to die with it, for the step-up in tax basis that is available upon death.

    So, at the end of the day, you will find that a lot of the older complexes are available in estate situations, especially where the surviving spouse and/or heirs don't want to own or manage the properties.

    There should be bargains of this kind around.

  • Lufos9th October, 2003

    Most correct on prior posting.

    Here in Southern California in view of the tax situation, Probate Estates during the last six months are heavy with multiple dwellings which have been exhausted as to depreciation schedules, improper structures of ownership etc. etc. These items are now appearing in Probates as the Owners run out of time on earth. I am sure there are a few up there in heaven spinning like crazy in view of the offers being made and the taxes their estates may be subject to.

    In an endeavor to reap this strange windfall some persons are taped into a Court House Service that has been unused for the last few years. This is a couple of elderly ex court house employees, retired, who cannot stay away. They are listing the Cases containing valued properties and of course full contacts as to Heirs and Attorneys etc. They abstract, but instead of notes on yellow legal pads like a 100 years ago they abstract direct to Lap Top wireless to client office computer.

    Nothing changes, same old stuff except the Tech is so much better. They still can't spell, but then who can.

    This gives interested parties a considerable lead and contact to Heirs.

    Very helpful just in case someone needs imediate money in exchange for an assignment of interest coupled in some instances with a Quit Claim Deed.

    The really kicky thing is the name they have utilized for this service. "Legit Curae"

    Cheers Lucius

  • GFous10th October, 2003

    For those of you that PM'd me looking for the Multi Family trade journal...here it is for all:

    www.multifamilyexecutive.com

    Good source for all sorts of builders, financiers and specialists in the multi family industy.

    Gregg
    [addsig]

  • InActive_Account21st October, 2003

    Something to think about...

    Not all lenders are capitalized equally. The standard basis is 20-25% down. Other lenders will ask for a lower LTV for better rates. Some lenders who are multi-family can be broken down to 5-20 and 20+ unit lenders. Some lenders make you sign a personal guarantee, while others don't. Obviously the longer the term the better your cash flow will be. You also have to review CAP ratios carefully. You have to look at the obvious expenses and un-obvious one like paying yourself a management fee. If you or anyone else wants I can email you a Monthly Operating Income Statement. This is a required document for smaller multi-units and is generally not required to larger buildings. It will give you “the” shopping list of criteria to look for in a property when filtering out the over priced “bargains”. This is the same document underwriter’s want on doing A-typical deals. It is good to have around, that is a sure thing.

    Respectfully,

    Phil

    Phillip Herrejon
    [ Edited by Pherrejon on Date 10/29/2003 ]

  • BethE1st November, 2003

    GFous,
    What is nonrecourse money?

  • GFous2nd November, 2003

    Nonrecourse money is money that you borrow and the lender can not go to you personnaly for. Only the deal.

    Non recourse lenders are not easy to find but common in multi family deals - esp new construction.

    Gregg

    _________________
    Gregg Fous
    Investor/Developer

    "If you wait for all your ducks to get lined up, you will never get into the water"[ Edited by GFous on Date 11/02/2003 ]

  • duan9th December, 2005

    Hi, Phillip

    Culd you please email me the Monthly Operating Income Statement. Thank you

    Duan

  • personalvoice15th December, 2005

    Here is the efanniemae page for the Operating Income Statement (Form 216)
    http://www.efanniemae.com/sf/formsdocs/forms/216.jsp

Add Comment

Login To Comment