How could I finance this complex without my money?

[Account Closed]

I found a seller who wants to sell 8 townhomes (4bed/2.5bath/2200sqft each). They currently rent for 2200 each. 5 of them have 12 month contracts on them, the other 3 are currently vacant due to renovations being done. It is listed at 2.5Million. (I would offer closer to 1.9)

I currently do not have the ability to put a down payment on this property. I would be looking to get a silent investor. 

How would repayment work? Could I add value by giving the investor 100% of profits until his downpayment was returned with interest while I managed the property?

I am just not sure the correct way to structure this. I am new to commercial, and while I am not jumping into this deal.. I would love to at least hear how you would go about it.

[Taylor L.]

In our deals, we pay investors a preferred return and a split of proceeds at close. Generally, investors want their deal sponsors to have some skin in the game financially.

What you've described seems more like a hard money loan type of situation, which is going to cost a bit more than equity investment. 

When you add value to multifamily, it's almost a guarantee that there will be a drop in occupancy initially as you evict the non-paying tenants, and as you raise rents folks will move out. That could mean difficulty paying the note on your hard money loan. 

What is the NOI? What does a $2.5MM price mean in terms of cap rate? What about your $1.9MM?

What specifically can you offer your investor in terms of return on this deal? Generalities only take us so far here.