How Do I Do A "no Money Down" On An Apartment Building?? Please Advise??
Hello All...
I seen an ad in a pennysaver I might want to pursue. Two Apartment buildings fsbo, 6 units, all full, $2300/mo income. Asking $175,000. I still have not called yet to see how motivated the seller may be or anything else about the property. But, I would like to know if it is possible to do a "no money down" on a deal like this and how? You can email me or pm me or just leave it here for all to read. I really would like some residual income like this and I don't have much cash to start but good credit. Please advise if possible <IMG SRC="images/forum/smilies/icon_smile.gif">
[ Edited by sharpREI_PA on Date 12/10/2003 ]
You will not find conventional financing at 100%. You can use a variety of creative techniques and may be able to accomplish this.
Taking a 70-75% mortgage out on your apartment building and the rest of the LTV from another property probably works about as good as anything.
How about L/O for 12 month term?
Any "no money down" method that can be used to buy a home can be used to by an apartment building. I'd look into:
Sub. to with a wrap around
Use a partner
defered settlement (if you're buying into equity)
Get 75% LTV 1st and a 25% seller carry on a second (and a lender that allows 100% CLTV)
borrow $ for a fixed return (your dad's HELOC, for example).
Thanks for all the advice. I really don't know how to do sub 2's yet. So , I am just going to talk to the seller first and go from there. I will have to be a little creative here. Thanks again
This brings up another question? What if the seller will carry 80%? What's the best way to come up with the other 20%? ideas, insights?
If the seller would do 80%, you could find a partner for the other 20%. Or, you could find a conventional lender to do 75% to 80%, and have the seller carry a second, although it would probably be tough to find a lender who would allow a seller 2nd up to 100%.
, and am not sure if I have it quite right, but sounds good.
Depending on how much is owed, you could do something like this:
-seller owes $120K
-purchase price $175K
-seller wants 10% in cash, would carry the rest
-have the seller refi at 85% (I heard that refis on apartments at 85% are not too difficult, can anyone confirm or deny that)
-Refi is $148K, pays off the existing first and pockets the remaining $28K.
-Buyer takes over the new 85% loan and does a 15% second with the seller for the rest.
Someone who knows these things might want to check my logic. I heard about this recently (can't remember then name of the "guru"
One thing I should add is that he owns it free and clear also it will need about 100k in fixup, and he wants 500k. Fixed up the place can sell for 700k or can keep for cash flow. He said he is willing to look at all offers as long as he gets his price.
Also in the above example:
"Buyer takes over the new 85% loan and does a 15% second with the seller for the rest. "
Would you record the 2nd after you close the deal on 1st so the bank doesn't know about it. Is that legal, or do you have to tell them. Can't it be a private mortage that is not records until maybe a year later?
Thanks[ Edited by scr2001 on Date 12/12/2003 ]
scr2001
You could close it afterwards, but trying to hide the second is not perhaps ethical. Your call I guess. You probably want to find a lender that would allow the second (this could be the downfall of my plot I suspect), or perhaps secure the second with other real estate or assets if you have them.
Perhaps you should open a new post and give the details of your transaction, including income etc and your exit strategy.
There are two lenders on this site that offer 100% financing with a 680 credit score NOO. You said you have good credit. Check them out. Just click on the Lender link and put in your scenrio One company is in Fl. the other in UT.
Financing the conventional way may be possible if the buildings are separate and on two different parcels. Getting a loan on a 3-unit is just like a sfr, with a higher rate.