Skip to content
×
PRO
Pro Members Get Full Access!
Get off the sidelines and take action in real estate investing with BiggerPockets Pro. Our comprehensive suite of tools and resources minimize mistakes, support informed decisions, and propel you to success.
Advanced networking features
Market and Deal Finder tools
Property analysis calculators
Landlord Command Center
$0
TODAY
$69.00/month when billed monthly.
$32.50/month when billed annually.
7 day free trial. Cancel anytime
Already a Pro Member? Sign in here

Join Over 3 Million Real Estate Investors

Create a free BiggerPockets account to comment, participate, and connect with over 3 million real estate investors.
Use your real name
By signing up, you indicate that you agree to the BiggerPockets Terms & Conditions.
The community here is like my own little personal real estate army that I can depend upon to help me through ANY problems I come across.
Buying & Selling Real Estate
All Forum Categories
Followed Discussions
Followed Categories
Followed People
Followed Locations
Market News & Data
General Info
Real Estate Strategies
Landlording & Rental Properties
Real Estate Professionals
Financial, Tax, & Legal
Real Estate Classifieds
Reviews & Feedback

Updated over 7 years ago,

User Stats

49
Posts
19
Votes
Chang Hee Lee
  • Real Estate Broker
  • Champaign, IL
19
Votes |
49
Posts

Owner Financing on Apartment Complex

Chang Hee Lee
  • Real Estate Broker
  • Champaign, IL
Posted

Hey BP,

So a friend of mine is looking at a $1.4 million 14-unit apartment complex and has convinced the owner into talks for owner financing. The owner is selling because their partner is leaving for California and it is simply too much given her obligations to family and etc. A common theme it seems. Anyways, he has come up with four different avenues and wanted a second opinion on them (This is his first owner financing proposal on an apartment complex). My experience with such large properties are limited so I thought I'd throw it out to BP..

Annual Net Operating Income = $102,560/year   

Taxes = $38,000/year (2015)

Listing Price = $1,400,000.00

Previous Purchase Price = $1,000,000 (4/29/2013)

1) Principal Paid at Later Date - $1,400,000.00 paid in 25 years

2) Principal Divided into Monthly Payments (No Interest, 30 Year-Term) - 

Estimated Payment (Including Taxes) = $7,055.56/month or $84,666.72/year

Profit (Before Rent Raises & Etc.) = $102,560 - $84,666.72 = $17,893.28

3) Interest-Only Payments & Balloon Mortgage (5-Year) -

Assuming 2.875% interest rate for 30 years and $1,200,000 purchase price

Estimated Payment (Including Taxes) = $6,041.67/month or $72,500/year

Profit (Before Rent Raises & Etc.) = $102,560 - $72,500 = $30,060.00

4) Principal & Interest Divided into Monthly Payments -

Assuming 1% interest rate and $1,200,000 purchase price

Estimated Payment (Including Taxes) = $7,026.34/month or $84,316.08/year

Profit (Before Rent Raises & Etc.) = $102,560 - $84,316.08 = $18,243.92

This is a lot but any feedback would be greatly appreciated. Also, hailing from Champaign, IL so if there's any state specifics in relation to these types of transactions (I'm more SFH), I thank you for any input you may have.

Loading replies...