Residential Real Estate Agent · Dillon, MT · Member since 2008 · 3 posts · 0 votes
I am wondering how anyone else is financing Multi-family properties....I have found several GREAT buys, some are REO's and some are regular Realtor listings. With the REO's I have attempted to work with the banks with vendor financing but they are wanting 20-30% down ( I do not have that) same with regular bank financing. How are you getting around that huge down? I am new to the bank loan portion of financing deals.( I used to have a private source of money, which is no longer available to me.) Any help would be greatly appreciated.
Just as Uwe suggested, I would have the lender finance 70-80% and ask the owner to carry the rest for you.
The owner will get a huge chunk of their monies now and be able to make interest on the rest for years to come.
Thank you for your reply's. Some of these are such good deals that I would not mind even paying more than the asking price but the reo property banks would not even talk to me when I told them that I could not give them 20-30% down even if I would pay them more for the property
There are local banks here that offer 15% down on a three year arm 360mo. AM NOO at 5.25%. The VA offers a loan with 5% down and 4.5% for 30 years. Find a realtor who knows investment property and ask them if they know of any deals like this.
Most banks want the buyer to have some skin in the game. In my experience that has been a minimum of 5%. It's interesting that they don't usually care where it comes from... as long as the buyer brings it to the table.
Also, and more importantly, don't get so caught up in the notion that a seller will finance some portion of a deal... that you forget to be brutally honest regarding its cashflow capability with such a high LTV.
And... since I guess I preach this everywhere else there is a financing question... I would encourage you to seek out and create relationships with small local banks... as they are where many of the smaller commercial deals get financed.
If you are interested, I wrote a blog post on this the subject of creating these relationships. It can be read at...
http://www.biggerpockets.com/blogs/585/blog_posts/3040-mastering-the-money-game-
I just sumbitted an OTP on an REO last night with the intent to finance 100% of the purchase price and receive 10-20k back at closing for repairs. I worked with a mortgage broker from Bay Tree lending that has a bank that is still willing to do these type of loans as long as they are financing 80% or less of the before repair value.
I this specific deal I am hoping to purchase a 4 unit for $150k with $2900/month gross rent that should assess for at least $240k. Last tax assessment was $309k, but we know how accurate those are.
I would reiterate what was already said about building as many relationships as you can with local banks but also try to meet some mortgage brokers and see what they are offering.