Financing options

[zapper7177]

What would be a reasonable interest rate to pay an investor who puts up the down payment for an apt. building. How long would you go until refinancing to pay him off? Is asking the seller for a 10-15% VTB reasonable? What could the interest rate be for this? I am seeing more interest in apt. buildings but I definately need an investor with deep pockets. The potential is there but trying to convince people I know is like pulling teeth. They seem to think they have to manage the properties themselves. Your input is appreciated.
Thanks

 

[housingrental]

10-15% interest is in ballpark - unless you can negotiate better.
With a VTB you`ll still need additional funds if getting a first mortgage at close to normalized rates.
You can ask the seller for vtb at lower rate (1% even, etc..) - something like having an investor put down 15% and getting a vtb for 20% 2nd might be doable - and some will provide to facilitate selling the property / at the price they want / ie you`ll often pay a premium for this vs the purchase price you could have gotten but minimizes cash needed on an ongoing basis during time of VTB

 

[Thomas Beyer]

QUOTE (zapper7177 @ Aug 5 2010, 10:56 PM) .. The potential is there but trying to convince people I know is like pulling teeth. ..
what is your experience with apartment buildings ?

finding investors is very hard with no track record .. very !

Would you go to a dentist or heart surgeon if you were the first patient ?

Buy one or better 3 buildings with your own money first .. then ask others to participate !

Getting a VTB from seller depends highly on seller motivation, 1st mortgage and price !

 

[zapper7177]

QUOTE (ThomasBeyer @ Aug 6 2010, 08:56 AM) what is your experience with apartment buildings ?

finding investors is very hard with no track record .. very !

Would you go to a dentist or heart surgeon if you were the first patient ?

Buy one or better 3 buildings with your own money first .. then ask others to participate !

Getting a VTB from seller depends highly on seller motivation, 1st mortgage and price !

I have not had experience with apartments but my goal is getting in to them. I can see the potential of multi units but it takes a lot of work. I have a duplex, but getting more properties is getting harder to do.
everyone seems to be pushing the multi unit approach, and I can see the benefits but it takes a lot of money.

 

[housingrental]

Why not wait until you`ve saved enough to purchase and gain experience before asking others to give you money for a new venture? QUOTE (zapper7177 @ Aug 8 2010, 11:56 PM) I have not had experience with apartments but my goal is getting in to them. I can see the potential of multi units but it takes a lot of work. I have a duplex, but getting more properties is getting harder to do.
everyone seems to be pushing the multi unit approach, and I can see the benefits but it takes a lot of money.

 

[Thomas Beyer]

QUOTE (zapper7177 @ Aug 8 2010, 09:56 PM) I have not had experience with apartments but my goal is getting in to them. I can see the potential of multi units but it takes a lot of work. I have a duplex, but getting more properties is getting harder to do.
everyone seems to be pushing the multi unit approach, and I can see the benefits but it takes a lot of money.
multi-family is an extension of many duplexes .. similar work per property .. but more money required !

the step is usually NOT: one house, then a duplex, then an apartment building .. it is usually: one house, then a 2nd, then a 3rd, then a 5th, .. then an 8th .. then a sale of 3 or 4 .. then a multi-plex

nothing wrong with owing 20 houses or 11 duplexes !! easier to sell one or 2 .. as with a 20 suiter you can`t just sell unit 18 on the 2nd floor usually !!

 

[GaryMcGowan]

QUOTE (ThomasBeyer @ Aug 9 2010, 11:20 AM) multi-family is an extension of many duplexes .. similar work per property .. but more money required !

the step is usually NOT: one house, then a duplex, then an apartment building .. it is usually: one house, then a 2nd, then a 3rd, then a 5th, .. then an 8th .. then a sale of 3 or 4 .. then a multi-plex

nothing wrong with owing 20 houses or 11 duplexes !! easier to sell one or 2 .. as with a 20 suiter you can`t just sell unit 18 on the 2nd floor usually !!

I agree here. We own some 4 and 5 plexes as well as single family homes. It is far easier to start to on the SFH as Thomas has suggested. Own them for a few years, learn the ins and outs of being a Landlord / property owner. If you haven`t had any issues with your tenants yet you WILL. Better to learn with one or two tenants than having an entire building throwing you off your game.