1st RE Deal - 5 Unit Apartment Building

[Lane Nelson]

My 1st deal was a 5 unit apartment building almost 1 year ago. Overall, it's been good so far but as I've learned more about real estate investing I have realized I may have made a few mistakes on this one. A little background on the deal:

I purchased the property for $116,900, it appraised at $150,000, current loan balance is $89,937, paid 20% down and got a 15 year loan that balloons every 3 years. The rents were low for the market area and I'm making adjustments to those early this year. The previous owner took great care of the property with the exception of a few deferred maintenance issues with 1 unit already being addressed last summer.

The lender would not finance the property in my company name so it's been in my personal name. How do I go about getting it out of my name and into my company's name?

I'd like to incorporate the BRRRR strategy on this one. The property was pretty much turnkey so I haven't had to do any substantial improvements. From what I've seen, it seems like nailing down a good market value on multi family units like this one are a bit challenging. Any suggestions on a new loan for a property of this type? I'm a new investor and my knowledge of financing is still growing but the balloon element of the existing loan makes me nervous. Is it possible to get financing on a property like this without a balloon?

Thanks in advance for any advice you can provide and I hope you all have a happy, healthy and prosperous new year!

[James Wise]

Originally posted by @Lane Nelson:

My 1st deal was a 5 unit apartment building almost 1 year ago. Overall, it's been good so far but as I've learned more about real estate investing I have realized I may have made a few mistakes on this one. A little background on the deal:

I purchased the property for $116,900, it appraised at $150,000, current loan balance is $89,937, paid 20% down and got a 15 year loan that balloons every 3 years. The rents were low for the market area and I'm making adjustments to those early this year. The previous owner took great care of the property with the exception of a few deferred maintenance issues with 1 unit already being addressed last summer.

The lender would not finance the property in my company name so it's been in my personal name. How do I go about getting it out of my name and into my company's name?

I'd like to incorporate the BRRRR strategy on this one. The property was pretty much turnkey so I haven't had to do any substantial improvements. From what I've seen, it seems like nailing down a good market value on multi family units like this one are a bit challenging. Any suggestions on a new loan for a property of this type? I'm a new investor and my knowledge of financing is still growing but the balloon element of the existing loan makes me nervous. Is it possible to get financing on a property like this without a balloon?

Thanks in advance for any advice you can provide and I hope you all have a happy, healthy and prosperous new year!

 Commercial financing is never going to be as good as residential financing. Short periods with balloons being due at the end are the norm. You can probably do better than a 3 year though. US bank does 20 yr amortization with a 5 year call. You may want to reach out to them when it comes time for you to do your refi & or sell.