Is this possible??? please help!!! - Posted by Pierre

Posted by erick on May 20, 2006 at 17:24:57:

I just went through this type of situation. Mine was an 8 plex. I put down 10%, owner carried about 12% and our hard money man carried just under 65% of the deal. THis situation got me into the property because, at the time, I didnt have the 25% to go conforming. And wouldnt you know it, a major part of setting up this deal was “who” was going to be in second. Naturally both wanted to be first, but in the end the seller took second because the hard money guy and him spoke together and reassured each other.
But typically, the person/lender putting up the most cash gets first. Its mine belief, and Im sure your seller knows, there are many ways to swindle a second postion, so its a risky thing. Maybe you could make it worth his while to get him to go second?
I would not recommend this approach to getting into bigger deals because in the long run you eventually will HAVE to buy the second out (somehow). So watch out for short balloons on the second - set the whole deal up as if it is for the long haul!

Good Luck

Is this possible??? please help!!! - Posted by Pierre

Posted by Pierre on May 20, 2006 at 15:37:18:

ok i found a nice 12 unit apt complex in a nice part of town. the asking price was 2.6 M. After negotiating the seller agreed to a purchase price of 1.9M and Is willing to carry some of the price as long as he gets first position. I also found a private lender who is willing to lend me 65% LTV at 13% interest BUT he also wants first position. The apartments are all rented below what average rent is in the area (150 buck cheaper). the complex grosses about 11000 monthly and the expenses are about 5000. I really want to make this deal happen and i know the seller will not take second place. is there any lender willing to lend 100%ltv or anyone lending based on the ARV???

Load your butt in the car… - Posted by brandoncbsre

Posted by brandoncbsre on May 20, 2006 at 21:03:33:

…and find another deal. Even if you get the rents to market you are only looking at $12-13K a month coming in. With expenses of $5k a year(which is probably a LOW number)and a 100% loan at 10% for 30 years(which you will not find) this place won’t handle the financing. Cash flows negative $60k or more a year. A wise man once told me (Ray or Ed, I can’t remember) something about making chicken salad out of chicken you know what. You need to ask yourself if that is what you are doing here. Run the numbers and correct me if I am wrong. There are good deals out there, it is just easier to find these terds. I apologize if I come across as harsh. Good luck to you.