Financing Multi Family Investments

[Eli Shicker]

I am curious as to how most syndicators structure their financing to make the most sense for the investment.  For every property I've analyzed, once I factor in the debt service from the loan, all cashflow is wiped out.  I'm not sure if I am doing something wrong, or if these deals just aren't worth it.  How do you structure the lending? Interest only or is there always principal? 5-7 years with balloon payment?

Thank you!

[Adam Lacey]

Hi @Eli Shicker. The numbers for the loan payments themselves should be calculated the same way as any other loan. You just need the loan amount, interest rate, term length and amortization schedule to calculate your payments. But yes, as you alluded to, a lot of deals start of with interest only payments for the first portion. I would talk to a lender to clarify what to expect for your situation.

However - analyzing the overall business plan, equity structure, return metrics...etc for a syndication can get very complicated. It's important to have a really well-vetted model that you fully understand how to operate to ensure that you're doing it correctly. Send me a message if you would like to discuss further.