9 Unit Multifamily in Dayton, OH - Private Money

[Kevin Connelly]

Hi All,

My partner and I are working to put a 9-plex under contract for $285k with a $1k escalation clause. We have not gotten it under contract yet but we should have a decision by Monday. The property is essentially turnkey with less than $10-15k of potential work needed, and expected gross income of $4900-$5400. The strategy is to refinance after the 12 month seasoning period to pull the downpayment + interest owed to private money lender. We would not be putting any of our own money into the deal and this is not a standard BRRRR deal because we can not force appreciation with a rehab.

We are going to use private money to fund the downpayment @20%, roughly $64k with closing. Secure a commercial loan for the remaining 80%. 

Private money rate of 12-15% on a 12 month term no payments, full repayment plus interest due at maturity.

Generally, I'd like to get some input if we are thinking about this the correct way or will we run into issues with one or some of the following:

1- Will we have trouble securing private money with no payments until note maturity?

2- Will we have trouble refinancing and pulling out ~$73,600 (downpayment+interest@15%)

3- What other scenarios should we consider?

Much appreciate!