Newbie Needs Advice on Creative Financing

6 Replies

Hi BP,

My husband and I found a deal we are really excited about. It's exactly what we are looking for in terms of PP, commercial multi-family, and high cash flow. We've analyzed the deal with extremely conservative figures and it would cash flow around $1000 a month. We really want to secure this deal with as little to no money of our own so we can acquire another property quickly. Looking for some advice on different options to get a loan for the downpayment (30K). 

Thanks so much!

Approach the owner with an offer and request owner financing. It reduces their tax impact and provides them stable income with a higher return than they'll get if the money sits in the bank.

@Nathan G.

Thanks for your response. I asked the owner about seller financing and he is requiring an even higher downpayment. He is liquidating to acquire more assets himself so he really wants the cash. I'm wondering if it would be wise or a terrible choice to try to get a loan for the higher downpayment to do seller financing? He wants 40K down, amoritized over 30 years with a 3 year balloon payment (extension possible.) 

We just started new jobs that are bringing in plenty of income, but since we just started them, we don't have the back log to get a conventional mortgage. I do feel completely confident that the seller financing terms would work for us, but we just don't have the full 40K for the DP. 

I know a lot of people would say don't buy a property if you don't have the money, however we will have the money in just a few months, but I really want this deal now. I'm doing whatever it takes to find a solution. I've messaged family and friends and have offered them good terms to loan the money as well, but nobody I know has 40k lying around. 

Originally posted by @Jessica Piff :

$40k isn't that much in the big scheme of things. If the deal is that good, can you borrow the remainder of the down payment from a family member? Maybe partner with someone and split the monthly proceeds?

I have never asked to borrow money from anyone, but I can name ten people right now that have at least $40k in their bank account and they would loan it to me for a decent return or partner with me to purchase a property. Ask around and you'll be surprised what you find.

Why not sell/assign it to someone else? Honestly, if its a great deal someone will pay you $20k for it. Be sure to have an attorney prepare the Owner Finance documents! How will you pay for repairs if a pipe bursts in week 1? How many units?

@Nathan G.

I put the word out there to friends and family. Although nobody has the full amount I’ve had quite a few unexpectedly offer to at least pitch in a portion of it. I am also looking for partners. My expectation is that whoever loans me money will hopefully continue to do so once I pay them back with a good return. Most people in my circle aren’t getting 4-8% interest on their money sitting in savings.

I’d prefer not to split the profits with a partner but would rather just get loans for down payments and then pay them back with higher interest. I want to overall build equity and have high cash flow in the start of building my portfolio to build more capital for more assets.

@Ronald Rohde

Hi Ronald, thanks for your response. I do have 10k set aside for closing costs and cash reserves if anything goes awry. It’s a 6 unit. I didn’t think about selling the deal, I don’t know anything about that or how to go about it. I will definitely look into it. Hopefully if I do my due diligence and get an inspection done I can avoid costly repairs up front. When analyzing this deal I’ve accounted for 8-10% for capEx, and repairs and maintenance as well, so my cash reserves for that stuff will only increase each month.