Seller Finance and Jr Debt

Nashville, Tennessee
Mortgage Brokers & Lenders
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Seller Finance and Jr Debt

Christian Morsing
Rental Property Investor · Nashville, TN · Member since 2020 · 14 posts · 3 votes

Hey Guys,

I came across a $5mill MFH seller finance deal - 75%.

I would like to get 10-15% covered in some sort of Jr Debt.

What are common strategies used here?

I see a problem just with the lien being in 2nd position.

- Christian

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Kyle Spearin
Real Estate Agent · Boston, MA · Member since 2016 · 450 posts · 214 votes
2y

@Christian Morsing you could make the private money lender taking the second position a minority partner in the deal?

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  • Kyle Spearin
    Real Estate Agent · Boston, MA · Member since 2016 · 450 posts · 214 votes
    2y

    @Christian Morsing you could make the private money lender taking the second position a minority partner in the deal?

    1Reply
  • Sasha MohammedPro Member
    Lender · Costa Mesa, CA · Member since 2018 · 337 posts · 245 votes
    2y

    TBH i think your best bet would be to have that 10% - 15% 'jr. debt' be from cash-out on another property, if it's an option. Leveraging one to put "cash down" on another is not a bad play. you're effectively financing it, just financing it in a way that doesnt look like you're financing it.

    [email protected]949-351-1338
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  • Chris SeveneyBusiness Member
    Moderator
    Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
    2y

    @Christian Morsing

    Probably not gonna find anyone or it will be challenging / if you have other assets you could cross collateralize

    Another option is to bring on an equity partner for that piece of financing

    7e investments53 Reviews
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  • Karen WanamartaBusiness Member
    Investor · Knoxville TN · Member since 2024 · 55 posts · 17 votes
    2y

    @Christian Morsing get a line of credit backed by your securities (Fidelity, Etrade, etc). One of my clients has an etrade with about 650K in securities - 350k LOC at 7.25% last I checked with him two weeks ago.

    [email protected]914-413-8888
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  • Dillon Eversole
    Realtor · Tampa, FL · Member since 2022 · 4 posts · 2 votes
    2y

    To offer a viewpoint not previously mentioned, consider asking the seller to subordinate their 75% to allow your private money to take the first position. While some sellers may not be agreeable to this idea, you might find that many are quite open to it.

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