Question regarding value add apartment deal analysis?

[Hunter Harms]

I have a question on a potential scenario I could find myself in in the future:

I'm looking to offer on an apartment repositioning deal that has come up in my pipeline and I'm analyzing the numbers to determine at what price to offer (Initial offer, not in due diligence phase yet). I have received all of the financials from the seller; Income vs. expenses, etc. I am looking to get a loan for both the acquisition and construction of this complex because it is a great value add deal, but I'm now a bit confused on how to analyze the numbers for this before placing an offer because I don't know the exact rates ill be getting on said loan. I have not applied for financing yet because I am only running rough numbers, so I don't have the interest rates, points, etc that I'll be getting charged and am unable to plug them into my numbers to determine my initial offer price. 

From what I've been reading I will be wanting to get a bridge loan for this type of project, is this correct?

What is the best way to go about getting these financing numbers to plug into my analysis when I have yet to get approved for financing? 

Is this a situation where you can be pre approved for financing so you can use the actual numbers in the pre offer analysis?

[Nick B.]

Yes, you will need bridge financing if the project involves big rehab.

As for the rates, it is best to ask loan brokers about what's available. For preliminary analysis you may use 5.5% rate for both bridge and permanent loans. 

Another thing to consider, if a .25% move in the rate makes or breaks your deal this is probably not a good deal.