Financing a Large Multi Family

[Corey Reyment]

We are in talks with a few larger local operators on some multi family portfolios. One of the sellers we estimate his portfolio to be worth around $20 Million. He is willing to carry 20% of the financing. My question, would banks make us still have our own cash in to the deal or is it possible to get the bank to finance the 80% and the seller finance the remaining 20% to have a no money deal? What are some other ways you have financed larger purchases?

[Steve Hodgdon]

I bought a 45,000sf strip center with 25% down and $600k in cash for remodel. Thought that would be plenty to cover. That was 12/2006. By 3/2008 it was 80% dark and worth 1/2 what I paid for it. Fed the beast $100k/year for 8 years until market recovered.  Still working back to where I was in 06. 

You need reserves. Rents don't always go up.  today's cap rates aren't guaranteed to hold. If interest goes up, then investors need to pay less per door to make it up. 

In 2006 DFW market was 93% occupied. in 2008 it was 75%.