12 unit apartment bldg. - Posted by Tom PA

Posted by David on March 21, 2000 at 17:32:15:

often a conventional lender will expect the loan to be seasoned, sometimes for 12 months before they will allow a refinance. additionally different lenders have different rules on whether they will allow cash out refinancing on unseasoned loans.

12 unit apartment bldg. - Posted by Tom PA

Posted by Tom PA on March 21, 2000 at 16:42:40:

I am trying to purchase a 12 unit building. The seller is willing to hold a partial second. Maybe as high as 20%. I found a hard money lender to finance the first 85%, but it is only for a year. Can I refinance this after 6 months and actually have a no money down deal? Also, what type of inspections should I have done on the property. This is my first multi unit property. Thanks in advance for the advice.

Re: 12 unit apartment bldg. - Posted by phil fernandez

Posted by phil fernandez on March 21, 2000 at 20:56:06:

Hi Tom,

I like the apartments above the 4 unit threshold because it moves you into the commercial side of financing. And that type of financing is not always easily attainable. Which plays right into the hands, will the seller finance the whole thing, because there is little financing available for a 12 unit apartment building.

Mike below had a great suggestion about creating the 2 mortgages and selling off the larger 1st to create cash for your seller.

Ed Garcia might have some ideas, programs and contacts for financing this type of deal.

Good luck.

Other Options to consider - Posted by Michael Mororngiello

Posted by Michael Mororngiello on March 21, 2000 at 17:46:55:


With the 12 units you have a “commerical” property designation. These can be difficult to finance and also to refinance in the future.

It sounds like you have a FLEXIBLE and perhaps motivated seller on your hands? it would be a shame to have those very restrictive 1st lien terms on the property where you’ll have some concerns about taking out the short term dangerous balloon payment that will become due in a year. Additionally the sellers 2nd lien will slide into a 1st lien position when you attempt to refi unless you negotiate a subordination clause into your deal with him/ her.

With a seller willing to hold a sizeable 20% 2nd lien , there may be some alternative ways to make this work;

What is owed against the property? Are you or were you capable of putting down any cash as a down payment?

Depending on the amount of cash you can put down and your credit background you may be able to approach the seller to hold BOTH a 1st lien and a 2nd lien. The 1st lien can be set up over a longer period of time as “psuedo” permanent financing. That 1st lien note then can be sold at the time of the closing or shortly thereafter to provide CASH to the seller. Now you do not have a short term dangerous balloon fuse staring you down in 12 months. You have time to breathe. The seller will continue to retain his 2nd lien and collect monthly income on that note.

Michael Morrongiello