Questions on BRRRR for multifamily

[Adam Craig]

I have been doing the BRRRR in single family for 7 years and have done very well. Apartments have been on my radar for a few years but I am nearly ready to pull the trigger. I understand bigger units are better in terms of economies of scale but I want to start with a small one and work my way bigger.

I found an 8 unit apartment building in a very desirable area. It seems to be a good scenario - Apartment owner is nearing death and his kids want to liquidate his buildings fast. Her initial asking price is 315K being listed next week. The place is in really good shape - almost too good for the BRRRR because I am used to buying unlivable single family homes. But the rents are very low and the cosmetics can defiantly be updated for increased rents so I think it will be a good fit.

I am wondering to to expect on the finance side with BRRRR. I have good income/credit/experience/assets so as long as the deal looks good I think I should have a lender. I do have 2-3 banking relationships with commercial lenders because I refinanced about 12 homes on the commercial side. I also have a hard money lender who lends at 13% + 1 point who can help with the acquisition + rehab.

Here is what I need to know - 

Most commercial lenders will do up to 80% LTV on purchase if I am not mistaking - maybe a little less with some? If I were to purchase this property should I do what I do on the single family side - purchase and rehab with all hard money, then refinance with a bank in 6-12 months after we made changes and increased rents? Seems like 13% interest on a loan that size can hurt the deal.

I am also thinking maybe I can buy the property on the commercial bank loan and have my hard money lender finance the 20% + repairs then go back to the bank after repairs/rent increase?

Thoughts appreciated

[Seth Williams]

I have a commercial line of credit with my bank, it’s  used for whatever I want, like a heloc. If you have a ton of cash flow and your singles / other investments are thru that business, you should qualify for something. All depends on your bank tho.