Apartment building is too cheap? - Posted by Douglas Mandell

Real Estate Investing Apartments
#1

Posted by Douglas Mandell on May 22, 2007 at 11:47:33:

Yes, that is the first thing I tried. The problem is that the lender got burnt on this deal and wants nothing else to do with it. Furthermore, since I posted the first message, the seller’s partner decided that they really want a very quick cash sale, possibly at a further discount. I can swing that for the short term, but I don’t want to tie up that much capital in the long run.

I’ll pop over to the Financing forum and see what’s up.

Thanks,

–Douglas Mandell

#2

Apartment building is too cheap? - Posted by Douglas Mandell

Posted by Douglas Mandell on May 18, 2007 at 19:27:53:

Greetings,

I’m faced with an peculiar difficulty: I have the opportunity to buy a five-unit building with decent NOI for a very attractive price (the seller is a private lender who got it because a loan went bad and he just wants to unload it,) but the difficulty is that the price is below $100k and commercial lenders typically won’t write loans for less than $100k.

If I calculate the value based upon NOI and some reasonable cap. rate, then the property comes out closer to 130k, but lenders usually take the lower of the sales price and the value when determining loan amounts.

Does anyone have a suggestion on how to get this deal financed?

Thanks!

–Douglas Mandell

#3

Re: Apartment building is too cheap? - Posted by ray@lcorn

Posted by ray@lcorn on May 22, 2007 at 11:34:08:

Doug,

Excuse me for stating the obvious if you’ve already tried it, but it seems to me there is a win/win here for you and the noteholder.

Ask him to him hold the note for one or two years while you get the property turned around and stabilized. Then refi with a bank loan based on the improved performance numbers, cash out the note holder, and you’re an owner.

In the alternative, this is the type of deal that may fit a hard money lender. Try the Financing forum.

ray