I am relatively new to commercial investing and would love some help with a deal I have in contract. It is a 20 unit apartment cpmplex, very close to BYU (in the byu approved area). It is currently rented out to 99 students. I have negotiated the seller down to:
$500k down
$1.9 MM total
$1.4 MM carried back for one year
Etc.
What I need help with is I am trying to find a willing partner to put in the $500k or aomeone to assign it to for a %0.9 fee. Where is the best place to find willing investors?
What’s your strategy for dealing with that $1.4 million balloon? One-year is 12 very short months away and that will raise the eyebrows of anyone with $500k to invest.
[QUOTE=Brandon (NE Indiana);882817]What’s your strategy for dealing with that $1.4 million balloon? One-year is 12 very short months away and that will raise the eyebrows of anyone with $500k to invest.[/QUOTE]
I was thinking the same thing. More so given the property sounds like it is fully rented so there is no reason to think the income will jump up over the next 12 months.
I suspect the seller is putting you in a deal he knows he’ll win whether you perform or not. It’s priced at $95,000 per unit, fully rented, and in a closed market.
Without seeing the numbers my guess is there is no upside other than normal rent growth, and significant downside potential in new development that is endemic to college towns.
The terms of 25% cash down and a one-year balloon are not a “negotiation”. That’s what we used to call a bullet loan, derived from the two options at the balloon date: pay in full, or a metaphorical bullet to the heart. Also, I suspect the carry-back is actually a wrap mortgage, so the underlying debt terms are critical to know.
I have no idea of your experience level and mean no offense by repeating the oft-told advice to poker players: if you look around the table and can’t spot the sucker, you’re it.
But we learn by doing, and fortunately you can put deals here on the forum and get input from professionals without having to ante up anything but your time. I encourage you to give us the details of the property, i.e. income, expense, unit mix, age, and any special circumstances. With more information we can better steer you toward a deal/no-deal opinion.
My state of WA looks upon my “looking for investors” as illegal securities offering that is, repeat, ILLEGAL and needs to be stopped.
I couldn’t begin to tell you how many local area REIs I know who have been harried, harassed, hounded and sometimes fined big money fines for doing same thing.