Residential Real Estate Agent · Mc Keesport, PA · Member since 2012 · 449 posts · 154 votes
We are currently buying lots of single family homes using private money for purchase and rehab costs and then we're refinancing out with bank money at 75% LTV. In short, we're doing no money out-of-pocket investing, and are having good success with it. However, to reach our income goals we will need to look at purchasing chunks of units at a time - buying small apartment buildings.
So here's the question: What are the creative ways to get this done with no money out-of-pocket like we are doing with single-family homes? I often used to say things like "That's impossible!" But over the years I've bumped into people who are doing that "impossible" thing. Basically, I've learned that I don't know what I don't know, so it's best to stay open-minded to avoid boxing myself by holding a rigid belief system that may be something totally self-created. So... any ideas? Thanks in advance!
We just bought 32 unit complex. actually 8 quads, 6 in one place and 2 in another location.
70% bank, 20% seller, 10% me. and the 10% me actually was from some private investor money that I got mortgaging some of my free and clear rental homes.
So technically 0% of my personal money.
I am like a lot investors, tons of equity - no cash. If I had any cash, it would get spent pretty fast.
We just bought 32 unit complex. actually 8 quads, 6 in one place and 2 in another location.
70% bank, 20% seller, 10% me. and the 10% me actually was from some private investor money that I got mortgaging some of my free and clear rental homes.
So technically 0% of my personal money.
I am like a lot investors, tons of equity - no cash. If I had any cash, it would get spent pretty fast.
Residential Real Estate Agent · Mc Keesport, PA · Member since 2012 · 449 posts · 154 votes
11y
Oh Arlan... Did you have a hard time getting the primary lender to accept a second mortgage from the seller? I've had others tell me that they won't lend if there's a second coming behind theirs. Apparently that's not an absolute.
Investor · Cincinnati, OH · Member since 2013 · 2k+ posts · 1k+ votes
11y
@jerry
@Jerry Kisasonak I did my first multifamily deal, a 168-unit, using a master lease and raised the money needed for the down payment. Both of those options (master lease and raising money from investors) are ways to do deals without any of your own money.
Rental Property Investor · Scottsdale, AZ · Member since 2010 · 390 posts · 599 votes
11y
Jerry Kisasonak check out the creative finance program at justaskbenwhy.com
Ben Leybovich has the best material in the business and personally does the deals your looking to get into.
Thanks! I'm researching ML's now. My main question on them at this point is renovation costs. I assume that would be the responsibility of the Master Lessor? If this is the case, the initial costs would include the option payment and rehab costs correct?
Rental Property Investor · Massapequa, NY · Member since 2015 · 148 posts · 51 votes
11y
@Jerry Kisasonak, I think that is a good point- most conventional lender will not like seeing a second lien. That said, for 20-30% of the purchase price I think many lenders would be willing to accept personal guarantees.
You can definitely get creative. Especially if you are willing to give up a piece of the deal -- which I think long term can be more advantageous as your investors are seeing you as a successful operator, more likely to invest more in the future..etc.