Creative financing for Apt bldg. - Posted by Daron Klugesherz

Posted by D. Klugesherz on May 20, 1999 at 13:34:13:

To Ed Garcia & All:

My posting to Millie may have been misinterpreted by some. I should have written “no response to my E-mail as of yet”. I had not called Mr. Garcia via the telephone at that point. As I am obviously a newbie and had not done my homework, I had no idea who Mr. Garcia was or how he could help.

My apologies to Mr. Garcia if I made it look as though he was irresponsible in returning calls. This was not my intention, I should have my clear my method of contact, and taken into consideration the fact we are all busy people.

I have since spoken with Mr. Garcia and hope to do so again in the future. It was an enlightening and inspiring conversation.

Thank you Mr Garcia,

Daron Klugesherz

Creative financing for Apt bldg. - Posted by Daron Klugesherz

Posted by Daron Klugesherz on May 17, 1999 at 13:45:25:

I am in a situation where I have managed and maintained a 40 unit property for the past 5 years. The sole proprietor had a stroke 9 months ago and is now ready to sell. I would like to purchase the building, however this is about 5 years ahead of schedual and I have little to no money to use ($10,000). The building is valued at 2mil and has a $21,000 a month gross income. I live on site, and do all maint, management myself. Am I kidding myself or is there a creative Financing plan that would allow me to take over ownership and at the same time give the owner at least 80% of the sale price to put in the bank with the remaining 20% to be paid to him by me over the course of a couple of years?

Re: Time to talk to Ed Garcia - Posted by Millie I.

Posted by Millie I. on May 18, 1999 at 24:11:32:


I think this is the time to talk to Ed Garcia.

When you buy a 40 unit commercial property, what qualifies you for the loan may not be your personal income anymore. The rental income from the units will definitely play a major role in getting you qualified.

Also, the 40 units’ security deposits, last month’s rents, partial current month’s rents, and current year tax till the day of closing will all be given to you buy the seller on the day of closing. It will bring down drastically the figure you need to bring to closing.

Also, ask the seller if he would transfer his prepaid insurance for the building to your new policy. Believe me, one year’s insurance for a 40 unit will not be cheap.

Call Ed ASAP,
Millie I.

Re: Creative financing for Apt bldg. - Posted by mike

Posted by mike on May 17, 1999 at 22:19:15:

maybe he could refinance it for 80% …?

Re: Creative financing for Apt bldg. - Posted by phil fernandez

Posted by phil fernandez on May 17, 1999 at 15:16:17:


If you could get this apartment complex in your name at the right price and the right terms to spin off a large positive cash flow, you could set yourself up nicely. However if you miscalculate the numbers it could bury you.

Questions :

1./ Why does your seller need 80% cash out of the deal. He has been enjoying the cash flow, why not continue to let him enjoy it by having him take back an owner financed mortgage.

2./ Sounds like he is in a very challenging situation at this time and the large apartment complex might be contributing to the problem. He knows you and hopefully has built up a relationship with you. So he may be willing to owner finance.

3./ Could you get a lease option on the property? You are already managing it for him. Continue doing this in return for him giving you an option to purchase the property. With the seller knowing he has a future buyer, this may relieve some of his anxiety. And make sure he knows you are saving him a commission so deduct that from the price or from the down payment requirement.

4./ And finally, you will have to go see him and tell him of your interest in buying. At this time he may need someone like you to solve his problem.

Keep us posted. Make sure you check and verify all income and expense figures including the reserves for replacement.

Re: Time to talk to Ed Garcia - Posted by D. Klugesherz

Posted by D. Klugesherz on May 18, 1999 at 13:37:19:

Thank you for the lead. Have done what you suggested. No response yet. Is there a direct number he can be reached at?

Re: Creative financing for Apt bldg. - Posted by D. Klugesherz

Posted by D. Klugesherz on May 18, 1999 at 13:22:33:

Phil, Thank you for the responce. I spoke with the owner and his wife last night at legnth. He has been a very good friend and is willing to work with me. His current condition limits the amount of input he can make and his wife has very little to no experience in real estate. My lack of knowledge at this point is also A big factor. I did not have enough information about owner finance to talk much with them about it, the same goes for L/O. Should I obtain a real estate lawyer or a buyers agent?
They have signed with an agent, whom I will see today so he can look over the property. We only spoke for a minute and I have not said anything about the my interest to purchase. The market in Denver is very hot and this property will sell fast, so my time line is very short.
Where do I go from here? Any advise? What books or internet sites my help?

I want this property!

Re: Time to talk to Ed Garcia - Posted by Ed Garcia

Posted by Ed Garcia on May 19, 1999 at 09:12:58:

Mr. Klugesherz:

It is true that I have had calls that I have not returned.
This is not done with intention. I am so inundated with calls, that there
have been calls that I have not returned as promptly as I should.
In some cases I have found phone numbers and notes on my desk and
have had no idea where they came from. I am convinced that some
one comes in at night while I?m gone, and sabotages my desk. LOL

But the truth of the matter is, that the name Klugesherz, is not exactly
a house name, and I think I would remember it if you called.

But if you say you did, that?s good enough for me, I apologize for not
getting back to you.

Daron, saying that you managed the complex, could in tail many things.
Most managers that manage a building of this sort, collect rent, do
minor repairs or over see all repairs, fill the vacant units, police the site.

Others, such as management co. do all of the above and, pay all the
bills, pay the mortgage payments, handle the banking, etc.

Even though you have managed the complex for 5 years, I don?t really
know your knowledge level in this capacity.

What ever your experience is, it is safe to say that the owner of the
building is familiar with you, and comfortable with you, other wise
they would not have kept you around for 5 years.

I?m sure if the owner is to do any kind of creative financing, they would
do it with you.

My mind is starting to swim with idea?s, but Daron, I really need to
talk to you. I need more information. For the benefit of time, of which
I have very little, why don?t you try and call me again.

I?ll been available for you at 2:30 California time. My number once
again is (909) 944-0199.

Till Then,
Ed Garcia