Financing a Multifamily Property with No Money — MultiFamily Education
It is a common assumption that multifamily investing is impossible if you don’t have tons of cash within reach. If you have been in one of my mixers, meetups and other events, maybe you are considering multifamily investment and have thought of the many benefits I keep on talking about.
- More cash flow
- Easier property management
- Huge tax breaks
But then comes the biggest question, how are you going to finance a multifamily property with little or NO MONEY?
I have always emphasized to my clients there is a need to be very creative in terms of financing a multifamily unit. While it is true that you do have to raise enough money for down payment to purchase a multifamily property, you are never strapped down to impossibilities.
Here are the top 5 strategies on how to finance a multifamily property with little or no money:
1. Private Money
If you really want to move forward in multifamily investment but have little to no cash, private lenders are especially useful. If your network does not have a healthy list of private money lenders, contact me today and let’s discuss. I built BAMF in the idea of helping people achieve their multifamily investing success and with that I share access to my huge network of investors and lenders.
Private lenders don’t have to be necessarily connected with an investment firm. As I’ve said, these are just individuals who have cash sitting and are willing to invest on you. Scrape your list of friends, family and colleagues who may happen to have an open mind about your multifamily investment ideas. If you need help convincing them with the right deal, let me help.
2. Equity Shares
There is a slight difference when working with an equity share investor over private money lender. With a private money lender, you simply promise to give them a regular return. With equity shares, you give them a portion of the equity of the multifamily property you are looking to purchase. If they like the deal, they will give you the funds needed for a down payment.
This one is a great financing strategy that works like magic for the very reason that equity is very appealing to investors. This option gives investors to also generate both short and long-term cashflow, something that can motivate anyone willing to lend your down payment goals.
3. Material Sales
This happens in rare cases that a multifamily property may contain valuable materials or resources that can be sold upon purchase of the property to help generate down payment. Again, I say it is rare. Materials such as dirt, plants, timber, gravel and other resources may prove to be valuable for other properties and if sold through an agreement it can be a source of cash.
There are always hidden opportunities under each deal, you just need to be creative.
4. Repair Allowance
A strategy often overlooked by some investors to generate funds for a multifamily property down payment is arranging the repairs yourself.
It works when you inspect the multifamily property and make a list of repairs needed before the purchase takes place, have the seller agree that the money will be given back to you at closing.
A good solution is to contact someone you have done contract work before and make an arrangement with them and bargain for the price. Whatever money it generates, you can put towards a down payment.
You Just Got to Be Creative with Financing
Some of the things I have mentioned above does not mean that having little to no money is the most favorable approach to multifamily investing. It is just a reminder that there are plenty of solutions if your problem is getting your initial pot of cash for down payment.
I have helped people get their multifamily property investments going and I use my own network to find them the most suitable deals to break into the market with ease and pride. Contact me today if you need any sort of real estate help.
Originally published at bamfworld.com on October 19, 2017.