Creative financing: 6-plex in need of full rehab in Kansas City

[Tom Sharkey]

I have a friend whose father owns a 6-plex in a nice location of Kansas City, Missouri. He bought it when  the location was a D neighborhood but now its a solid C or C+ with a very promising future as it is located within 3/4 mile of the streetcar extension line. It needs complete rehab as it's had squatters living in it for the past couple decades. It needs new plumbing, HVAC, electrical; a complete gut. There are several 6-plexes within the neighborhood and rentometer shows them renting for $850-1000 per month. I'm pretty sure they haven't been updated either. 

His father is now wanting to sell however I've motivated his son to purchase it from his dad, rehab it, and hold it for cashflow. The father's been talking to an agent who says the plex is worth about $250k as-is and $500-800k ARV. If my friend could get a nice discounted price from his father, how would he go about getting funds for rehab? Would short-term apartment building financing or a government-backed apartment loan be the best route? He's never bought real estate but he wants get in now. I told him I have some capital to throw in the deal if he'd like to partner but I've never bought multi-family nor have I done complete rehab before.

My main concern is with financing. Are there hard money lenders who will lend $300k+ for multi-family investment to guys with good credit but with no multi-family or rehab experience? I've heard if you get a truly great deal then it's easy to get interest of others with money.

Any guidance or referrals are welcome. Thanks in advance!

[Luke Miller]

Hi @Tom Sharkey sounds like you/your friend found an opportunity. Did you say that squatters have been in there for decades? That's crazy! Why hasn't he evicted them sooner? That's a lot of lost income.

I would personally approach his father with a seller financing agreement. Purchase the house, use a private/hard money loan to rehab it, get it rented up and then refinance it out into long-term debt. You will be able to find someone to lend you money, but I doubt it will be easy. It's more about the deal at that point.