Need Funding for First Commercial Apartment Deal
Hello all. I am looking for assistance setting up financing and closing my first commercial apartment building. I have an accepted LOI for the purchase of a 64 unit building in Sacramento CA at a purchase price of $4,000,000. The property was a foreclosure and the current owner purchased it 8 months ago. It has been completely renovated and is now 96% occupied. Rental income is $502k (reduced by a estimated 5% vacancy), operating expenses are $133.8k which gives a NOI of $368k. I had set it up assuming 80% primary loan with a 10% seller carry, which would translate to $262k in annual debt service on 30 year loans. This leaves around $100k of cash flow after everything. While my credit is good at 765, it is becoming difficult to find funding due to the CA and commercial real estate market, and the scale of the property relative to my other rentals (mainly 4 units, some SFRs). Additionally I would like to utilize a DPA fund to assist with the downpayment, but many lenders are requiring fund seasoning and net worth requirements even though the loan at that level is non-recourse. One lender even told me they wanted to see equity of the principals of 3 times the loan value - or around $9.6m for this transaction.
Does anyone have any experience closing commercial apartment buildings recently? Has anyone been able to utilize a DPA for the downpayment? What lender(s) did you use and how did you get around the equity requirements? I may look to bring in a partner, but I don't like giving up part of the ownership - especially to someone I don't know.
If anyone has experience (especially using a DPA) or suggestions on how to fund this deal please post here or PM or e-mail me at: [EMAIL REMOVED]. Your help is much appreciated.