Multi Unit Property
I am negotiating to buy a property that has 36 units 2 bedrooms ac, heat, etc. I want to know is how can I develop a deal to come out with cash at closing? I curently have a 10% down [CARRY] from the seller and I have options on different loans one is more conventional but its 80% LTV and I am not interested in using cash out of pocket, the other is 10% down or 90% LTV but at a 9% rate. please give some insight or some ideas of where to go or how to structure financing :-D [ Edited by hibby76 on Date 05/13/2004 ]
If the buy price is lower than the 90% LTV needed then the difference should be gotten from the seller as cash back at closing.
If there isnt enough in the deal to get cash back, then you could add on to the existing property to raise its value and get a construction loan. This would get you the loan based on finished value, not what it would cost you to build, and in turn the extra, would be in your pocket.
Your buy price is the most important factor in all of this. If your buy price is 80%, your loan value is 90%, there is 10% available to you as cash back. However, if you are buying it at 100% of its value then there isnt any room for cash back in the deal unless you make some more value.
Good Luck,
Kyle
Increase the purchase price by 5K (or whatever you want) and have the seller include a 5K concession at close. As long as it's under about 6% of the total value, you should be fine. Give reasons (vacancy expense, defered maintenance, roof, carpet, cash reserves, working capital, etc).
Hey thanks for the input. Here is another issue. I was reading the apartment adds in the paper and they are advertising the apartments as large one bedroom which they really are but marketing them as 2 bedroom or 1 bedroom with extra sitting area. I just seen the inside and I think they are okay but in a perfect area for growth. They are also marketing the apartments 25 to 50 dollars less than they stated that they were renting them for after renovation. What is your thoughts on this?