Need help w/creative financing - Posted by Robert _WV

Posted by ZACH on August 23, 2005 at 18:44:45:

Sent you an email with some options.

Need help w/creative financing - Posted by Robert _WV

Posted by Robert _WV on August 23, 2005 at 17:16:33:

Looking at buying a 12plex apts. 3 buildings with 4 apts. each. One building has fire damage. Appraised for $215K in 2001. I can get it for about$115-120K. Want to write it up to have $30K concessions to cover repairs. Not sure best way to approach or if I can only get hard money because it needs $25K repairs. Any advice would be appreciated and point me in right direction. I would like to get into as little as possible with out of pocket. Any creative ideas would be nice.

Re: Need help w/creative financing - Posted by Robert _WV

Posted by Robert _WV on August 24, 2005 at 08:15:56:

I don’t know what bridge financing is. There are 3 buildings 4apts each building. 2 buildings are all rented and the price is what the 8 units up and running are making. Working on the third building would not interfere with the rest.

Re: Need help w/creative financing - Posted by John B. Corey Jr.

Posted by John B. Corey Jr. on August 23, 2005 at 22:40:45:


You said there are 4 structures but 1 property - at least you implied as much. Hence I take it there is one title.

Second, you indicated that the property needs significant work relative to the future value. Hence I think you should definitely consider the fact that you might use one solution to acquire and fix up the property and then refinance or otherwise change the financing.

Some sort of bridge financing that lets you get things up and running, get the repairs sorted, get the rent roll in line with where it should be as a 12 unit building and then consider more permanent financing. I am guessing that the fire damage is impacting the gross income and potentially the expenses.

You said you want to get in without much from your pocket. Do you have the cash necessary to deal with the building while you are improving it. Repairs can be higher then expected, tenants might move out during the work phase, the city might hit you with upgrade requirements (bring things up to the current code), etc.

Hard money could be a solution. Credit line or other forms of working capital if you have access to such things. Soft terms or full financing from the seller until you get the repairs done is another choice.

It is a little hard to say without more info.

Either post here or send me email.

John Corey
Chelsea Private Equity LLC