Can I buy a $1M apt bldg for $62,500 down? Ohio-Flip-Buy-Hold

[Ken Faler]

Apparently Liberty Rental Finance is a new subsidiary of Ocwen and specializes in providing bundled loans on portfolios of single family houses and apartment buildings. I am working with a loan officer right now on a bundled refi for $450K (group of 8 single family homes). 6.75% @ 70% LTV and they claim that's a 30 year fixed product. The first I have found to go out more than 5 years on a fixed rate. Rates high but my plans are to pay on a 20 year am, and the comfort of the fixed rate is worth it.

But that's not the best part...supposably this loan officer is also touting another product. He is offering a loan vehicle that...so long as one borrower who owns 25%+ of the LLC (Borrowing Entity) and has a 620 credit score ,then the remaining borrowers do not need to personally guarantee the note. So in theory if I start an LLC with a partner and provide $62,500 in equity and my partner provides $187,500 in equity then we are in the position to put 25% down (250k) on a $1,000,0000 apartment building, where I (the individual who put down only $62,500 is the only one required to personally guarantee the $750,000 note. (Now for the creative part) If this "other equity partner" is typically used to being my Private Lender. Would it not be possible to draft an equity purchase clause in the LLC paperwork allowing me to purchase his shares of the LLC over a period of say...5 years where he nets the equivalent of a 10% return at the time his shares are purchased. Coincidentally the 10% return being the same return he is used to getting on his private mortgages/notes. (The longer it takes to purchase the shares the more they cost). This solving the problem of how do I buy a $1,000,000 apartment building for $62,500.

[Jeff Greenberg]

so long as one borrower who owns 25%+ of the LLC (Borrowing Entity) and has a 620 credit score ,then the remaining borrowers do not need to personally guarantee the note

I don't see this happening. Even though the ownership of the property is in the name of the LLC you personally will guarantee the loan. Anyone owning over 20% of the LLC will also be signing. If you don't have the required networth and liquidity then some one else will need to sign.

I like the idea of buying a 2mil or more property with 0 of my dollars. Now I may have to settle for 30% of the deal, but I don't run out of money.  I can get 30% of the next deal and the next, and the next.