Updated over 6 years ago on . Most recent reply
🖐🖐Financing help for small apartment buildings
Looking to purchase a small apartment building between 400 and 800k. Do I need to have my LLC registered before I start making calls?
Will a typical bank want 20% down. Are there any other ways to get financing for an apartment building.
Open to hearing a broad amount of advice. Thank you for you time if you choose to respond.
Most Popular Reply
Regarding DSCR, make sure you're calculating this correctly. It's not as simple as T12 or Pro Forma NOI. It'll likely be:
- T3 Net Rental Income
- T12 Other Income
- Pro Forma Insurance
- Pro Forma Payroll
- Pro Forma Property Taxes
- T12 Other Operating Expenses
In regards to property taxes, you don't need to automatically adjust them to 80-90% of your purchase price. It depends on your area. That's the rule for Texas, where they aggressively chase the sale. Other markets, like Phoenix, have laws that prevent that, and you can safely/conservatively underwrite a 5% increase per year during your hold, since that's the statutory limit.