Raising Money for 20 Unit Apartment Rehab

[Trey Nixon]

Hello, 

Seasoned professional investor in the Augusta GA area.  Recently acquired a 20 unit apartment Complex, fully vacant.  Incredible in-place long term seller finance terms (awesome!).  The deal was 24 units, and one of the buildings burned down the other night (no one hurt).  I was about to sell the property instead of keeping it, until the insurance company gave me an estimate of what I would get for cash value on the building.  I purchased all 24 units (6 buildings) for $200K ($20K down, 7%, 30 year am, 5 year balloon, 475K left on note).  Since acquiring for such a good price, I was going to exit my position and sell to some colleagues of mine that focus on apartments locally.  

Since the fire, they have left the deal and I am now going to keep it.  I am looking to raise about $400K to renovate all 20 units and lease up. I could self fund over the next 12 months, but would bleed my cash flow.  I don't want to take to a bank and give away my great first position financing, but I know I will most likely have to.  My attorney hinted at a syndication type deal (sell 15-49% equity stake and raise the money).  Exit strategy would be to lease up an keep for investment/cash flow, etc, or lease up and season and sell to larger investor (fund, etc).   $1.2M sale would make a cap rate around 10% with estimated rents and total investment.  Any suggestions on what to do to raise the $300-$400K to renovate the entire project without giving up my 1st position financing in place and without giving up equity?  Also, I am located in one of the fastest growing medium markets in the country, Augusta GA.  Thanks in advance.  

Trey Nixon

www.nixonhouses.com

[Dan Gamache]

I can't think of an option keeping your 1st lien position in place. I think you'd have options taking a new 1st position construction loan (pay off existing loan + 400K). Once rehab complete and units fully rented, you'd probable qualify for local bank financing at good terms.