Can I Use A Promissory Note For My Down Payment?-Zero Down Process
I want to use a promissory note for the down payment of this apartment community I am going to convert to senior housing, I am trying to do a zero down deal and still reflect to the lenders that I have some risk in the deal. The seller has agreed to bump up the price the amount of the down payment or provide me a second in the amount of 20% I will then get a loan for 80%LTV. Please assist if I am doing this incorrectly and provide the correct legal steps to accomplish this sale.
if you are wanting traditional bank lending this will not work. The lender will want to verify the source of funds for the down payment. A note will not satisfy a lender that you have something to lose in the deal. The best you can hope for is 5% of your own money with seller 15%-20% carry back and a 75%-80% loan.
You will need several months of cash reserves in a liquid account .
The property would still have to cash flow enough to satisfy a DSCR and qualify for the loan.
If you want to tackle this from a senior housing purchase w/ major renovation, a loan could be possible for up to 90% w/ 40yr amortization.
In either case you need some of your own money into the deal to make it fly.
Good Luck,
Robert
[addsig]
How can i make this a zero down project? I already have the seller paying for closing costs, what else can i do to give the impression i have invested money into the deal?
How many units in the complex? What kind of dollars are we talking about here? What is your track record in senior housing? In apartments in general? Where is the project located?