Apartment Complex Financing

[Austin Freeman]

Hello BP,

I'd like to first say that I am working with my father on this deal. It is a 66 unit apartment complex with garages for extra income. He is actually doing the accounting and management full time for the current owner, who is ready to retire and travel. Our only issue is the financing aspect, which we would like to avoid pursuing seller financing.

I'll get right to the point; here are the numbers (calculated without P&I):

Purchase Price-           $5,000,000

Monthly Income-        $49,800

Monthly Expenses-     $21,800

Monthly Cashflow-      $28,000

Annual NOI- $336,312

*This is just an extremely condensed format of a 4 page income statement. I have accounted for maintenance, turnover, payroll, bad debts expense, insurance, marketing, and various other miscellaneous expenses. The only expense that I did not include is the principal and interest.*

I would like to poke around to see if there are any options other than seller financing or traditional financing. Traditional financing of the full $5M at 4% would turn the annual NOI into around $52,000. This is feasible, but we would like to explore other possibilities.

I am extremely interested to see what anyone has in mind for this deal. I would be happy to include anything that may be missing or unclear.

Thank you all very much for what you do for this community and Happy New Year's!!

[Chase Gochnauer]

I have a similar deal at $4.25m that I am closing on very soon with a local bank @ 20% down. Personal guaranty

Terms:

0.5% loan fee
4.61% interest
5 year fixed
20 year amortization

The Freddie Mac Small balance loan looks like the best deal, but I think can be more challenging/time consuming to get the loan. I may look into refinancing into this a year or two down the road

http://www.freddiemac.com/multifamily/product/pdf/...

Local banks can be negotiated with on a deal like this, don't immediately take what they offer you. Loan fee and interest rate are negotiable to a point.

@Tom S.

That seems a bit high for a rate for something like that. All my stuff is at 4.75%-4.85% or so with 20-25% down.