Posted by Lenny on January 17, 2009 at 14:31:12:
Different people are in different circumstances. What I was looking for was different points of view, maybe one from somebody with capital, another from somebody with experience managing, etc and how they would go about acquiring this property. I know I am not ready and have read the articles within the site about 100% financing, ie. Desire to acquire, but I still want to begin learning. Can you help me out?
Sounding board - Posted by Lenny
Posted by Lenny on January 16, 2009 at 15:05:23:
I am not quite ready to step it up. I consider myself in the minor leagues at this point with several sfh’s but want to, hopefully soon, get into big multi unit properties. Lets say everything checks out and it is a matter of financing, how would you go about buying this property? I know this is kind of a generic question but please indulge me. Also what reading material would you recommend for me, dealing with multi unit properties and more specifically financing them.
91 units, several on ground are commercial, for 2.5 million. Average rents here are 350-425 for 1 bedroom,425-500 for two bedrooms. Not sure what the mix of units are but lets say 50/50 for this scenario. The building is considered a historic building.
Re: Sounding board - Posted by camgere
Posted by camgere on January 17, 2009 at 11:49:02:
Can you memorize the phrase â??You can lower me into a wood chipper if Iâ??m late one penny on one payment.â??
Loans arenâ??t just a bunch of silly paperwork. They are a promise to repay every penny. And a ton of interest. Since you mentioned no financial resources, can I assume you donâ??t have $830,000 for a down payment? Or one or two hundred thousand dollars for operating capital. Iâ??m guessing you want 100% financing of $2.5 million. You are willing to take a ding on your credit if you donâ??t pay it back. You are buying 91 used toilets, 91 used stoves, 91 used kitchen sinks that all have to be kept working. A building inspector could waltz in and require you to put 3 prong electrical outlets everywhere and the code enforcement people could say, sure, but everything has to be put back to historical accuracy.
91 families will depend on you for their safe, reliable, comfortable home. The loan officer at the bank has to be convinced you have the skill to run this operation and pay back the money. The loan officer has to follow all the rules and s/he could lose his job if he takes a chance on you and the bank loses a million dollars. If you want to self declare that you can operate at this level I suggest you read Robert Ringerâ??s Winning Through Intimidation (and Looking Out For Number One). Pick a 6 to 12 plex locally and approach a bank and work through their requirements. Learn about financial statements and documented past tax returns (you can order these from the IRS with permission of the taxpayer).
That way you will be closer to a knockout presentation to the loan officer on your next deal. It wonâ??t hurt if you have a partner with 20 years experience who looks like Lou Dobbs or some financial network guy to give the presentation. Bankers love suits and good grooming.