Multi-Housing Financing! Help! - Posted by Andrew

import · January 12, 2004, 4:40pm

Posted by Brian (WA) on January 13, 2004 at 12:12:01:

Andrew, I would suggest conventional financing. Depending how your credit, income, assets, and what your cashflow will be will also determine how you should structure this transaction. There are several creative ways to do this especially since the seller is willing to do a carryback.

import · January 12, 2004, 4:40pm

Posted by Andrew on January 12, 2004 at 17:40:52:

Hi,

I need some suggestions on how to structure/finance a deal I was presented with. A local investor contacted me and said he is tired of “dealing with” the 10 rental houses he owns. These properties were handed down from his father and he does not have the patience or the know-how to work with them. All of them but one are currently rented out through section 8 with a GROSS annual income of about 65k-70k. He is asking 250k for all ten but said he is willing to work with the price (a little). He is also willing to carry back the financing on the 250k for 10yrs @ 7% WITH 20% DOWN. All of the properties TOGETHER have a FMV of between 300k-350k. Some are worth less that 30k and some are worth more.

I do not have the CASH for the down payment and am not sure which would be the best way to go about getting it. I’m obviously trying to keep my monthly payment down to maintain a good cash flow and I would rather go 30 yrs than 10 to help with this.

Should I work with hard money for the down payment?

Try and go through a conventional lender?

I have bought several rental properites in the past but never 10 @ one time!

How should I approach this deal?
I would appreciate any experienced feedback.

Thanks,
Andrew

import · January 13, 2004, 1:29pm

Re: Multi-Housing Financing! Help! - Posted by John-VA

Posted by John-VA on January 13, 2004 at 14:29:04:

Andrew-

Here is how I am looking at this:

The seller is offering you 100K in equity in these homes. He’s offering to carry back the financing. I’m a little unclear as to whether he wants a 10 year amortization or if he wants a 10 year balloon. If it’s a 30 year amortization on a 10 year balloon, based on the figures you’ve provided you should be clearing around $45,000 NOI per year.

Do you know anyone who’s willing to lend you the downpayment money? Start asking. You can even secure their loan with the property.

If he’s willing to negotiate, I’d clarify a 30 year amortization on a ten year balloon. Maybe even offer to pay a little more if he’s willing to lessen up on his 20% down demand. You need to find out why he’s got 20% on the brain, see if there is a particular dollar amount in mind that he needs to walk away up front. Then see if you can get that lower. This looks like a good deal if you are on a buy-and-hold strategy.