Private lending for multifamily

[Morgan Brown]

A set of two multifamily properties are being liquidated and sold near me and it’s about $2M before any possible discount/negotiations with the owner. They are currently almost entirely rented condo or townhouse style units, producing income. How would one go about getting a loan to take on the properties? I own a construction company and would manage them and manage maintenance myself, and likely even rent a unit to myself to keep it simple (I’ve been a resident manager before too). My investment company has one property in the middle of a rehab right now, so our assets are all tied up in it but the opportunity is now.

Ideas?

[Jason Wray]

Morgan,

That's an easy one you have a few options like DSCR, Portfolio and Non/QM feel free to send me an email or send me a message.

[Robin Simon]

Quote from @Morgan Brown:

A set of two multifamily properties are being liquidated and sold near me and it’s about $2M before any possible discount/negotiations with the owner. They are currently almost entirely rented condo or townhouse style units, producing income. How would one go about getting a loan to take on the properties? I own a construction company and would manage them and manage maintenance myself, and likely even rent a unit to myself to keep it simple (I’ve been a resident manager before too). My investment company has one property in the middle of a rehab right now, so our assets are all tied up in it but the opportunity is now.

Ideas?

 What is the unit count here?

When it comes to multifamily, the financing options really differentiate based on these general three unit count buckets:

2-4

5-10

11+

[Morgan Brown]

Quote from @Robin Simon:

Quote from @Morgan Brown:

A set of two multifamily properties are being liquidated and sold near me and it’s about $2M before any possible discount/negotiations with the owner. They are currently almost entirely rented condo or townhouse style units, producing income. How would one go about getting a loan to take on the properties? I own a construction company and would manage them and manage maintenance myself, and likely even rent a unit to myself to keep it simple (I’ve been a resident manager before too). My investment company has one property in the middle of a rehab right now, so our assets are all tied up in it but the opportunity is now.

Ideas?

 What is the unit count here?

When it comes to multifamily, the financing options really differentiate based on these general three unit count buckets:

2-4

5-10

11+

 One is 7, the other is 5, they are adjacent on the same street so 12 units total.

[River Sava]

Hi Morgan -

It sounds like a DSCR portfolio loan might be a good fit for this scenario, given the rental income and the potential for self-management. With assets currently tied up in another project, a loan based on the income of the properties rather than personal or business financials could help leverage this opportunity. I'll send over a DM to connect and share more details.

[Nick Belsky]

@Morgan Brown

You may find better pricing by breaking these up into 2 sales contracts and 2 transactions.  Many lenders have brutal release fees to break up a blanket loan these days; many are 125% of the allocated principal balance.  So where you'd save a small amount on UW fees and perhaps cross collateralized title fees by doing a blanket loan, you will lose all that savings and more IF you ever decided to refi/sell one without the other... just a heads up.

The other issue here is you say your assets are tied up... meaning you have no liquidity?  You'd need to show enough funds to close (down payment + HOI + Title + Fees) and usually 3-6 months reserves.  Reserve requirements vary greatly from lender to lender but you have to acceptable reserves of some sort as well.

Lastly, keep in mind, many lenders will not consider managing properties where you are not on title as experience.  So even if you currently manage 100 properties, if none of them are 5+ units and you, or an entity you are a member of, are not on title, then you have no experience.  This disqualifies a lot of borrowers or makes the terms undesirable.

Cheers!

[Lluis Allen]

@River Sava hey river please dm me

Details.

[Esther Joseph]

Quote from @Morgan Brown:

A set of two multifamily properties are being liquidated and sold near me and it’s about $2M before any possible discount/negotiations with the owner. They are currently almost entirely rented condo or townhouse style units, producing income. How would one go about getting a loan to take on the properties? I own a construction company and would manage them and manage maintenance myself, and likely even rent a unit to myself to keep it simple (I’ve been a resident manager before too). My investment company has one property in the middle of a rehab right now, so our assets are all tied up in it but the opportunity is now.

Ideas?

 Hi Morgan, I sent you a message! Let's connect