How to Get an Apartment Building Loan without a Lot of Capital

Obtaining an apartment building loan typically requires a large investment from the borrower. You usually need a large down payment and money for necessary repairs. However, sometimes it is necessary to obtain a commercial asset, without much capital. Although it is not an easy process, it can be done. Here are a few things to consider if  you want to buy an apartment building and do not have much capital:

Home Equity Loan

One way to get enough money for the down payment is to take out a home equity loan. This is sometimes considered bootstrap financing because you are relying on your own assets for the money.

This is one of the riskier strategies to come up with the money, but it can work. Just be sure of the investment as you are now tying up your personal assets in the endeavor. If the opportunity is strong enough, it could be well worth it in the long run.

Partnership

Even though you want all the profit to yourself, sometimes acquiring a partner is the best way to get the money you need. If you can find someone who has enough money to invest, it can get things moving quickly. Someone that you know and trust is essential to the process because you will be undergoing a large commitment together. 

Hard Money

Hard money loans are another way to get the money you need quickly. Hard money lenders are sometimes referred to as private lenders as well. These are individuals or small businesses that are looking for a larger than average return on their investment. They look for deals to invest in on a regular basis and your apartment building could be exactly what they are looking for.

Be aware that you will end up paying a hefty sum in interest, so the property should provide a sound profit. While it may not be the ideal way to borrow, you will still be able to get the money you need. Getting hard money does not require the lengthy business loan application process that you see at standard lenders either. You simply fill out a few forms and you will have access to the money almost immediately. 

Option 

If you have located a fantastic deal before anyone else, you may need time to get everything together if you do not have the money. You can place an option on a property to prevent others from purchasing it, while you search for financing. Putting an option on the property is a great way to hold it until you can get your ducks in a row. This will keep the property from being scooped up by other investors before you can get the loan figured out.