I have a apartment building deal that I’m working on right now and the deal is solid 100% occupied recent appraisal income approach $2,300,000 as is $2,200,000… Paying $1,845,000… NOI: just under $210,000 a year… I have perfect credit and can qualify for loans but the lenders I have talked with says I have to have at least 2 years experience owning an apartment building this large to fund the loan (I hear the same from other lenders as well) and since I don’t have the 2 years experience owning such a large apartment building I need a partner who does have the experience to come in and be a credit partner - key principle in the loan for the lender to fund the loan… My question is where do I find a partner?.. Do any of you guys know of people that own apartment buildings that would like to own a portion of a $2,200,000 - $2,300,000 apartment building without putting up any cash of there own with them being a credit partner in the deal?
Jake,
Based on the way you stated the request, you want an experienced apartment investor to take on the credit risk that you know what you are doing. The downside for them is pretty steep. While I am not saying you should not try to find someone, I expect any solution that works for the lender will also put you in the back seat. The experienced investor will want to make sure you can not screw up their track record.
Flip it around for a second. Could you make the existing owner a JV partner (very lose definition of one) by taking on the building for 2 years without obtaining new financing? The seller leases or provides the financing while you become seasoned. You did not share the seller’s motivation. I am just thinking a seller is more motivated to do a deal than a random, third-party who has experience.
In addition to John’s suggestion (which is a great one of the seller motivation is in alignment with your interests), you didn’t say how much you’re putting into the deal.
The numbers supplied look good (subject to verification) and an 11% going-in cap rate leaves plenty of room to provide a preferred return for a partner. However, speaking as a seasoned investor, I would want to know your financial strength and how much you are investing in the deal.
ray
Jake:
I agree with Ray’s assessment. A going in Cap of 11 is outstanding.
Per your post, it reads that you already have the funds you need to close the deal; you just need 1 to N credit partners to co-sponsor the deal.
If you’re already talking to lenders, are you through DD and has any earnest money gone hard? Just trying to get a sense of what your ASAP means.
I’ve got some plane time in the next week as we’re going into physical on a ~150 unit multi-family asset in Texas. Shoot me over details if you want and I’ll give you my opinion/thoughts on the deal, market, asset, etc.
I look at a lot of deals and as Ray would tell you am not shy about sharing my opinion.
Jake,
I meant to comment on Dan Chamberlain’s post above in real time last week, but the universe loaded me up with more than I can pay attention to at once.
Let me clue you in on some background information. Dan is the COO of 37th Parallel Properties, the company I am associated with in multi-family investment and education. If I were you I’d take him up on his offer. He runs a company with just under $100mm in commercial real estate assets and is an expert in deal structure and finance.
A shameless plug… you can learn more about Dan and the company in the webinar replay of “How to Achieve Permanent Wealth with Multi-Family Properties”. Click on the link and it will take you directly to the replay, but hurry, it’s only up until Thursday night 4/19/12. (If someone is reading this after the replay is down, post a reply to this thread and I’ll get you hooked up with the information.)
Link to Webinar?
I just joined CREOnline. Is there a way to get that replay?
Thanks,
Raphael
[QUOTE=Raphael;884820]I just joined CREOnline. Is there a way to get that replay?
Thanks,
Raphael[/QUOTE]
Good question. In the past I think they expired after a grace period. No idea if there is a way to reach back into the archives.