Question for commercial lenders or brokers

[Travis Salley]

Hey there, Right now I have about 50k in equity on my rental. I am trying to save up another 50k within a year or so. I would like to sell my property and put 100k down on my first apartment building for around 1,000,000. My question is is this a realistic goal? It looks like many commercial loans require 20 percent down, but I have seen some for 10 percent. Any advice or things to think about would be greatly appreciated. Thanks!

[Tim Milazzo]

Hi @Travis Salley,

 Not a great goal if you'd like to stay independent (no equity partners). Your two most obvious options are:

• Reduce your investment size - No way $100k nets you a $1 Million property alone. Think $400k, and you'll need to get a community bank on board with 75% leverage (which is actually aggressive for most community banks), and 25 year amortization. It will take talking to a lot of community banks if you don't have additional funds to showcase liquidity reserves and a higher net worth, as the loan will be full recourse.
• Partner up - combine your equity with a couple other investors to have 30% equity ready for that $1 Million property.

 - Tim