Down payments for apartments

[Ty Loney]

I found an 8 plex with a good CoC return, and a decent price. It needs minor rehab. I have done six plus flips and done well with that. My question is I need X amount of dollars for the down payment. I have the funds to rehab to get more for rent but not the initial down. I can bring in an investor in to cover the down payment but not sure how to buy them out eventually or just let them stay in. And how can I structure that so both of us make money. I bring the hustle and knowledge just not the cash flow.

[Chris Mason]

This is easier than you think.

Not commonly done for 1-4 unit residential, but very common for commercial.

If you need a 35% capital injection, you find the human person with that capital. You form an LLC with them two weeks before closing, and that's what buys the property. The LLC buys/owns/operates the business of the apartment building located at 123 Banana St. You don't need to establish business credit ahead of time for the A-paper great commercial mortgages, we do them all the time without any established credit.

So you wind up, fast forward a couple years, with a bunch of different LLCs that you share ownership of with different people. Totally normal and fine for commercial real estate & the associated mortgages.