First Multi-Family Rehab

[Tony Tonev]

I have a really interesting opportunity to buy an 11 unit multi-family in Noblesville, which is a suburb or Indianapolis. Here's the listing https://matrix.miborblc.com/Matrix/Public/Portal.a.... Originally, it was listed for 950k, the price was dropped to 799k, I offered 550k, and the seller accepted. One finished, I calculate it would be worth 1.2 M at a 8% cap rate, which is typical for the area. Apparently, he put 650k of his own money into it and has been working on it for the past 1.5 years, but he ran out of money and needs to sell to pay his debts. It still needs a lot of work to complete, and I don't have experience with rehabs, so I'm not sure if this is a fantastic opportunity or a huge mistake yet... I will go there in person to supervise the effort, but I feel like I don't even know what I don't know, and I need someone experienced with these types projects to guide me. One idea I have is to give away 5% equity to someone with experience to come in on the project and help see it through completion. One bridge loan lender has told me that would also make it easier to approve the loan. Do you think this is a good idea? Do you know anyone who would fit that description and be willing help? I really feel like I'm in over my head, but still I don't want to walk away from a great opportunity out of fear of the unknown. I have about 200k that I can allocate to this from a 1031 exchange. If I borrow 700k (550k for purchase, and 150k for rehab) at 25% down, that's 175k, and that leaves enough for closing costs. I actually don't even know how much the rehab would cost, but my gut tells me 150k would be enough. This is exactly why, I need someone's help!