Posted by ray@lcorn on May 22, 2007 at 11:51:58:
Dee,
First and foremost, this is generally not a no-money down business. Banks require cash equity of at least 10%, and maybe more depending on borrower’s net worth and experience level.
Second, even if you do put a deal together with all borrowed funds you may soon be wishing you hadn’t. Take a look at this article for further discussion about the dangers of over-leverage: http://www.creonline.com/articles/art-203.html
Accessing equity funds is the primary challenge for most folks making the move from SFRs to commercial properties. There are numerous ways to raise cash, but all will require planning and execution well in advance of the need. This will include making decisions about your investment priorities and then taking the action necessary to move forward.
A shameless plug, the first module of my book “DealMaker’s Guide to Commercial Real Estate” is targeted to that situation. For a full description and excerpts, see http://www.creonline.com/catalog/b-140.html
And a second shameless plug, if you would like the opportunity to gain the knowledge you need in a live workshop setting, and have a mentor for six months to show you exactly how to do what is taught, then you want to talk to Ed Garcia about his upcoming workshop, “How to Get Lender’s Fighting to Give You Money”. See the information web page at http://www.creonline.com/tveg_workshop/index.html or give Ed a call at 909-944-0199.
Best of dealmaking,
ray
Financing Downpayment & Closing Costs? How? - Posted by DeeTN
Posted by DeeTN on May 18, 2007 at 13:44:54:
Hi Ray and Fellow Investors,
I have been looking at several potential apartment buildings that I’m interested in purchasing. Thing is, it seems like the best ROI comes from the bigger units. I have recently found an apartment complex that I’m interested in(I have only been doing residential for a couple of years and own 6 properties) - and they want $2.8 million for it. Most lenders only loan 80% of the purchase price, so my question is - how could I come up with the remaining 20% plus closing costs?
That’s roughly $600,000 (if I wanted to go with this deal) and while I do have reserves, I don’t have that kind of money.
I’m still running the numbers and am in the process of obtaining more information. I’ve been given some tips, and I also read about the owner possibly taking back a second mortgage, but even if they did that, that would still leave closing costs which I guestimated would be around $170,000 - $200,000.
Any ideas?
Thanks in advance!!!
Financing Downpayment & Closing Costs? - Posted by kertis
Posted by kertis on July 02, 2007 at 18:02:20:
how ironic, Im looking at an apartment building for 2,600,000 and Im also looking at how to come up with the downpayment…I have property but all the equity doesnt even amount to half of what I’ll need… How can the average person overcome these obstacles…Any mentors out there that can give us a clue.?
Re: Financing Downpayment & Closing Costs? - Posted by Chris Cambridge
Posted by Chris Cambridge on May 29, 2007 at 15:48:19:
If there is enough equity in the property BORROW MONEY FOR DOWN PAYMENT AND CLOSING COSTS. The building will have to be worth at least minimum $3.6 mil selling at $2.8 mil financed @ 85% LTV.