What is the best way to Structure this deal ?

[nubiwan]

I have an opportunity with an investor who needs to free up some cash for another deal he is working on.



The property he is selling is a double lot 150x150 (2 lots not yet divided) which includes a shell for 3 townhomes on one lot, and 2nd lot is vacant land. Asking price is $300K. Lots are worth $100K each.



There is about $300K reno work to do on the shell to make 3 townhomes. I would provide that expertise, labour and materials. The breakdown is $80K Down Payment and $240K Labour and materials.



The total investment is $600K - units would sell for $250K each, so there is an upside of $150K plus the additional lot - so $250K.



Financing the deal is my issue:



The seller is willing to let his $120K note rest on the property whilst I renovate. I would put down $80K of my on money on sale.



I am unable to secure conventional mortgage as I simply would not qualify with all the properties I now own.



I need to find $100K to purchase the property. As I see it, I can JV with a 3rd party, or possibly get someone to put their name on a mortgage, if that can be done. Perhaps a family member or friend (has just occurred to me). I could use the land from the deal ($100K) as collateral.



Questions;



Do JV partners typically lend over 6-12 months and what can I expect to pay a JV from this kind of deal?



Can anyone point me to a good source of JV funding for this kind of deal?



Thanks All

 

[Aaron Moore]

Sounds like you need construction financing since you're buying land and the shells of townhouses.

I think this post needs input from a mortgage specialist.

Yes, ask a friend or family member to qualify for financing with an institution. Ask the friend or family member how much they want to make.

I assume the seller wants his $120k seller financing in 1st position. But, you'll probably get more than $120k and better rates if you get institutional money in 1st position.



As an alternative to a JV... Private lenders love lending for 6-12 months. If you're paying $300k, then some lender will probably lend you a $100k 2nd mortgage for 12 months. But it will depend on what province and city this is in... and other factors.

 

[Thomas Beyer]

Contact a mortgage broker, a MIC or a hard money lender like Romspen, Firm Capital, CareVest, TriCity, or Trez Capital and they will be happy to lend you 60-75% of value plus construction cost at 8-12% plus maybe a 1.5-3% fee upfront. Very doable if you are able to turn around this deal in a year and you can then keep 100% of the asset.