Can I finance deals like this?

[Pratik P.]

Hi Everyone!

So one of my big goals is to own a large multifamily apartment complex. So thinking back to Rich Dad Poor Dad, instead of saying "I can't afford it", I've been asking myself "how can I afford it". I thought of the following method to finance and structure such a deal and I'd like to get your opinions on how/if this can work! I'm in Sacramento, so I'll use related pricing.

33 Unit Multifamily

Purchase Price = $2,500,000

Down Needed (25%) = $625,000

I was told by a commercial loan broker that they would allow the owner to finance 15% of the down payment. So $375,000.

I still need to come up with 10%, which is $250,000. Let's say I get private money lenders to lend me total $300,000 so I can use the extra $50,000 for any immediate repairs needed.

Now let's look at the numbers (Monthly)

Average rent/unit = $775

Gross Income with 94% occupancy = $24,025

50% gross income for expenses = $12,012

Bank Mortgage payment for $1,875,000 @ 4% 30 year = $8,952

Seller finance $375,000 for 6 years @ 4%, with interest-only payments = $1250

Private money loan payment for $300,000 for 6 years @4% also with interest only payments = $1000

Subtracting all expenses and debt service from gross income gives me = $811 in cash flow which I would set aside to use only on the property.

After 6 years, I would have built enough equity to refinance and cash out to pay off my seller and private money lenders. This would increase my monthly cash flow immensely.

So is this something that has been done? What are your thoughts? I feel like I'm missing something so I need to learn while I'm 24 and not 34 years old!

Thanks for your valuable time and input