How do I fund this multifamily deal when I'm overleveraged?

[Libby Tucker]

I recently purchased a 2 family home in the Bronx. I also own a SFR divided into two 2-bedroom rented units (2 bedroom + MIL) and a seller-financed houseboat in Seattle. My gross income from rental units is approximately $14,000 / month. In equity, my SFR has $200k; my houseboat has $100k, and my property in the Bronx has ~$100k.

I have a unique model in the house in the Bronx that is a furnished co-live-work space for entrepreneurs in which I include services like linens, coffee/tea, community manager, etc and for which I'm able to collect rents that are approximately 2x the area rents.  I'm able to do this because I have an existing network of entrepreneurs that I can tap into for this type of co-live-work experience, from my tech entrepreneur background.  

I'm looking to expand this concept now that I have proof that it works.  The problem is that I used all my available cash, and I maxed out 3 credit cards to furnish the building and my credit score dropped.  I see this as temporary but a lender would see this as an issue.  

I have experience owning, rehabbing, and renting 3 properties, self-managing and being a landlord for over 10 years.  I'd like to move from tech entrepreneurship into full time buy and hold multifamily, expanding my co-live-work concept.  

I have an immediate opportunity to expand.  

The house next to me, a 3 family, is for sale and it's un-mortgageable. I have spoken with the agent and she agreed to stop showing it if I could come up with the cash. She's asking $420k, estimated repair value she said is $50k but I believe it's closer to $100k to fix it up and furnish it the way I'd want to. ARV based on my property value and online estimates between $600 and $700k. I believe it was just purchased at auction for ~$100k.

Questions: 

1) What could I offer if I had immediate cash?  300k?  200k?  

2) How can I get the house under contract without a buyer agent representing me?  

3) What kind of creative financing could I use for this deal, considering I have credit card debt and no capital right now - I've been using the rental income to continue to make updates, buy supplies, and pay off the credit cards.  

4) If friends and family will not lend you the money / don't have money to lend, where are some resources to look for private capital?  

5) How can I leverage the properties I have now, my experience, and create a packet for potential investors?  

I would like to go 100% in and expand my concept.  I am great at executing but fully leveraged and need capital - how do I attract the capital I need?  

Matt at FundThatFlip suggested I offer equity in my current Bronx property and equity in the new property, along with 100% guarantee of investment returned.  If I can get the capital for part of the deal, FundThatFlip will likely fund me, assuming the numbers worked out of course.   

What else could I do, leveraging what I have now, to finance this deal, or another one like it, and future deals as I expand?  I am anxious to do at least 2 more deals like this in NYC this year.  

[Ceasar Rosas]

@Libby Tucker

Hi Libby,

Do you live in Seattle and manage from there or do you have a PM taking care of it?

The 3 family being un-mortgageable would be your largest hurdle. Why is the property un-mortgageable, is it possible to do a renovation loan? Maybe you can find a partner who can put up the cash, you do all the work and split everything 50/50. You have an interesting concept that may be something you can present to potential investors. 

1. While 3 families in the Bronx are extremely hot right now, offering something in the low 300's isn't a bad starting place if you can do all cash.  

2. Simple, get an offer sheet done, something with your terms and offer etc... and make sure you have a good attorney on your side to look out for you when it comes to that contract. 

3. Private money will probably be your best option, someone with the cash, credit, HELOC, something. I know BP has it's own sources as well look them up.

4. You said the space rented has entrepreneurs, would be a good place to start to find people that may have funds to invest.

5. Make a packet of before and after pics, testimonials, before value and after value, comps, potential rents. Show what you've been doing in the packet. Think of what you'd want to see in a packet to make you want to invest in something. Pictures and numbers!! 

Network like crazy to find the people you need to help you fund these projects. I hope this helps a bit. Good luck!