Real Estate Professional · El Paso, TX · Member since 2016 · 3 posts · 0 votes
Hey Biggerpockets
First time posting. Was wondering to get some insight on financing a potential deal.
I have been negotiating with this seller for quite some time. This seller is ready to sell me there 7 unit building in El Paso, TX for about a 1/3 below of what I believe to be the market value. The numbers look something like this.
200,000 Sales Price
300,000 value(I've come up with this number using comps/cap rate/NOI)
29,438 NOI
14.7% cap rate (which is pretty high, even for the el paso area).
My question is, do you guys think lenders will lend based on an appraisal alone? I am trying to get into this deal with as few dollars out of pocket as possible. I am hoping since I have negotiated such a great deal, that I could avoid having to come up with 20-25% down like you typically would with commercial/conventional loans.
I am planning on hitting the banks all this week to see what I can get.
First time posting. Was wondering to get some insight on financing a potential deal.
I have been negotiating with this seller for quite some time. This seller is ready to sell me there 7 unit building in El Paso, TX for about a 1/3 below of what I believe to be the market value. The numbers look something like this.
200,000 Sales Price
300,000 value(I've come up with this number using comps/cap rate/NOI)
29,438 NOI
14.7% cap rate (which is pretty high, even for the el paso area).
My question is, do you guys think lenders will lend based on an appraisal alone? I am trying to get into this deal with as few dollars out of pocket as possible. I am hoping since I have negotiated such a great deal, that I could avoid having to come up with 20-25% down like you typically would with commercial/conventional loans.
I am planning on hitting the banks all this week to see what I can get.
Arshia,
Welcome to BP! If your numbers are indeed accurate, that will help working with any lender during underwriting process on the property side. However, they will also look into your experience, cash on hand to do the deal, and your FICO. all these things will effect the rates and terms you'll be able to get with a lender. unfortunately, no lender will base your skin in the game based on how good the deal is. As you mentioned, 25-30% down is typical for Permanent financing on any commercial property. Lenders want the borrower to have their I cash in on a deal to protect themselves and lower the risk on investment.
it doesn't hurt to ask around, you might get lucky. But it's not common to raise a lenders LTV simply based on it being a good deal.
You'll have to come up with 25% of the purchase price. I don't know anyone that's doing a gift of equity anymore. PM me for additional financing options.