Creative Financing for 12 Multi Unit Purchase

[Rebecca Tye]

Hi everyone! I am an investor in Ontario, Canada with experience in small multis; however I am interested in scaling up to a 6-12 Unit. I typically use the BRRRR method and I secure properties personally through conventional lending.

I have a family friend who has offered me the opportunity to buy his 12 unit apartment building.He wants $1.6 million for it - which in this area is high ($133K) a unit. It is typically $115K - $125K a unit but I also need to put some value on the opportunity. 

 This is a great building with lots of value add options - many of the units are rented below market value, there is opportunity to build out storage and meter out utilities. I have run the numbers and unfortunately because they have kept the rents low, and want a fairly high price for the property - my numbers are in the RED. I appreciate something will have to give...but I also want to make this deal favorable for the seller so he ultimately sells it to me.

 Re: The purchase - I would like to try and avoid using outside investment and put as little of my own money in the deal as possible. I appreciate this is a big ask.  

I am fairly certain they don't owe anything on the building and would be open to some sort of seller finance deal. I believe with commercial loans you need 35% down - which I personally don't have. So, I was thinking I could approach him to see if he would finance the down payment and then I could seek a conventional mortgage for the remaining amount. 

However, if they do owe something on the property I don't believe seller finance is an option, correct? Do I have any other options (in a Canadian context)? 

I am swimming way out of my depths here in terms of my commercial lending knowledge. So before I go back to him I want to understand my options. I have a meeting with my broker today but I know I can't approach this in a traditional manner as both myself and the property may not qualify. Does any one have some really creative financing strategies I could research further that may help me secure this property. What am I missing here?

I would greatly appreciate all your advice, suggestions, feedback, etc!

Thanks so much for your time, Rebecca