Commerical Financing Idea

[Christian Hutchinson]

I am meeting with 2 separate private investors this week. We are looking to step up into Apartment Buildings versus the SFH and 1-4 Unit properties we are doing.

The property in question is between 1.1-1.4M.  We barely have the money for DP and liquidity post closing. So I was wondering would a private investor be interested in this type of deal.

We put in 20% DP, the investor pays the other 80%.  They effectively becomes the lien-holder. They also get a 10% equity in the property.  Which essentially becomes a buy down over 10 years.  So the loan is 4.5% and the buydown is 1% for a 5.5% interest payment.  We pay this down until we reach 30%.  That is about 9.5 years which coincides with when we would need to refi anyway with a traditional bank/lender.

They would make $500K on the deal over the course of about 10 years. We place a provision that if we default they could essentially "evict" us.  Meaning we lose our DP and equity.  Then of course they could retain their own property management and basically keep all the profits for themselves.

Is something like this possible or is this too complex? Or most investors want more distance from a deal for various reasons because of liability.