Ideas for zero down multi-million apartment props - Posted by Don LeLievre

Posted by Bill Bott on May 06, 2008 at 09:27:59:

Dan,
We are in the same boat as you, residential experience with almost zero commercial but a possible good deal in front of us. Have not found much but 80% LTV loans although the rates are not bad. Omly solution I have found to this point is getting 100% seller financing and cashing sellers out 12 months or so down the road, or getting the seller to hold a second. Could you email me if you learn of any possible solutions and I will do the same for you.

Ideas for zero down multi-million apartment props - Posted by Don LeLievre

Posted by Don LeLievre on May 03, 2008 at 12:52:23:

How would my partner and I structure a 50 plus unit apartment deal with a sale price from $5mm-$15mm?
Do some motivated sellers take back second mortgages.

Here is an example we are looking at in Virginia:
41 units range from 1240 SF to 1680 SF with rents for
the 156 bedrooms from $555 to $850. This is a
historical preservation tax credit with the city of
Richmond, Virginia which currently provides
$70.1k/year and is further detailed in the prospectus.
With projected EGR for 2008-2009 is $1,150,261, NOE of $463,310 and NOI of $686,951 the property is offered at $11, 500, 000. These are 4 BD units with dining room, living room, decks and internal parking provide student housing and are fully occupied. DSCR would not be the standard 1.2% at these numbers but would a lender finance
a deal like this if a seller were to take back a second such that the numbers did come out to 1.2. Do some sellers hold a second with a stake in future equity or can someone provide other creative ideas.
Can anyone comment on rates, closing costs, debt load,
etc. FICO score is 719.

Our experience is in residential creative finance structures but we are new to commercial.

Re: Ideas for zero down - Posted by Tim

Posted by Tim on May 23, 2008 at 22:40:10:

Fannie will get up to 85% of purchase price or ltv.

I must sound like a broken record - Posted by carolfl

Posted by carolfl on May 16, 2008 at 17:37:53:

but I was in exactly the same place as you 3 yrs ago. Thank goodness, Ray’s Dealmaker’s Guide to Comm RE was just coming out! It gave me insight into the mindset of commercial re and commercial lending… very different animal. I can’t recommend it too highly. Commercial lenders, in my limited experience, are less likely, particularly today, to get excited about deals where the buyer has no skin in the deal. However, talk to some of your local banks. Get to know what kind of deals they do and don’t do. Again, Ray’s material is a huge insight into this sort of thing.
Have fun!
Carolfl