Raising Debt for Long Term Holds

[Marc Izquierdo]

Hi everyone,

I’m interested in raising debt for small multifamily deals but I have a few questions about it and how I want it to work with my proposed strategy.

One of the things I'm wondering about is how to structure a deal with multiple debt investors and what security they can be offered. For example, I find a duplex for 200k that needs 20k of work to get rented and operating. Since I only have one deal under my belt, I'm assuming that potential investors won't be comfortable with lending me 100% of the project cost. So my strategy would be to get a 70%LTV loan and mortgage from a bank and find maybe 1-3 debt investors to finance the rest. So at the end of the day I would have one loan from a bank (1st mortgage), a second loan from an investor, and maybe a third from another investor.

My questions are: Is this a feasible strategy? What type of security can I offer the investors? Can I give them 2nd and 3rd mortgages? How would a bank feel about that? If I can’t give them mortgages, then I guess I can only give a note and personal guarantee?

If anyone can offer some info on how to best structure something like this I would really appreciate it.

As additional info, I plan on buying in an LLC with a commercial loan.

Thanks in advance!