Financing Apartment Building, Question About Down Payment
This would be my first time buying a large apartment building so just have a question. For the down payment if I got the sellers to seller finance to me the 20% down payment, do most of the lenders that do commercial loans allow this?
Would like to talk to you more but I have limited access so did not see a phone number to call you.
Perhaps you could make the seller a partner in the deal, that way the partners are putting up 20% total.
Another thought is that you may be able to "massage it" and get a bit more than that. Raise the price and have the seller offer some concessions. You can typically go up to 6% of the sales price without raising red flags. Your broker could get paid 8% and make a contribution also. Just a thought.
Depending on the property location and the borrower's personal creditworthiness, there are some times where we place loans for a combined loan-to-value of 100%. But these are rare on commercial loans.
First, it would be on the very best properties, typically income producing such as apartments or offices.
Second, the lender will typically be a local independent bank that looks at the entire transaction and has an open-minded board or whatever credit "committee" looks at the deal.
Third, the deal has to hit all the usual numbers.
Of all the deals I've place here in southeast Michigan, I have only one local lender who will go to 100% under such a scenario. Most national lenders, for all other deals, will max out at 80% on the first, and 90% on a cltv. There is one lender who will partner with a group on a development deal, who will finance 100% on a joint venture after the group pays the soft costs up front.