What's an attractive offering to help with the downpayment?

[Jonathan Johnson]

Hello BP,

If I find a good deal on a large apartment complex, but don't have the money for the downpayment ($500-700k), what kind of product or offer can I structure to talk about with friends and family who might want to invest their money with better returns than saving/stock/ira?

And as far as calculating that in excel, how would I analyze what I can afford to payback if it's different time tables than a commercial loan? For example, I know how to calc the 20-year commercial loan, but then if I add investors is it a regular interest rate plus principle or simple interest?

I could probably just make up a plan, but I'm not sure how to explain it to friends and family that wouldn't sound complicated. I want them to be interested in the rate and return and also know that I'm going to be able to afford it. The deal I'm analyzing seems pretty healthy.

[Todd Magin]

Originally posted by @Jonathan Johnson:

@Franco Li The Apt complex currently has about a third of the apts vacant and is nearly zero cashflow. It's really just being neglected and with extremely basic property management could get positive and very lucrative cashflow. They also absorb many expenses that the tenants could take on, such as a few utilities, background checks for applications (they pay a lot for this a year), and damage out of deposits at year end.

NOI under new management could near 70k with savings for 7% vacancies, 7% repairs, and 4% CapEx (due to many apts in just 2 buildings).

I'm interested in trying to figure out how to schedule a payback period in excel, if anyone has number crunching experience with that for 1) the loan, and 2) the investors downpayment.

I'm a newbie here so pardon me if I'm stating the obvious, but if this property isn't cash flowing, you should be able to buy it for a deep discount.  Resist offering what the property CAN make with good management, but rather base your offer on its current operating performance.  You should be rewarded for rehabbing and managing the property properly, something the current owner either doesn't know how or is unwilling to do.

This sounds like a great deal, congrats!!