Review my possible creative financing!!

3 Replies

Hey everyone, well I am finally ready to offer on my very first property, being a multifamily property in Columbus, Ohio.

Since I do not have the capital nor do I want to use any of my own cash anyways, my realtor and I have come up with creative financing for my first deal. He has put me in contact with a connection of his who represents a lender who will do up to 90% for me with a good rate and term. Since I have not yet found a local person or group where I live to work with to cover the rest, my realtor has suggested that we offer the current owner to hold 20% (I guess a sort of seller financing) and the other lender would then do the other 80%. The current owner would hold a lease on the land and I would pay him as well as the other lender until I could afford to pay off the current owner. This involves a triple net (or NNN lease) and I am wondering who has had experience with such a thing and what types of things I should watch out for and any problems that could arise from this type of deal?

The owner seems pretty open to creative financing so we have sent a proposal which I am waiting on a response from. If he is ok with it I will go ahead and get the three appraisals done, land, building and improvements. Its seems like an interesting way to get my first deal done using none of my own cash (other than cost of appraisals and maybe some closing costs), but am looking for any input.

Thanks guys!!

Well I don't have any advice to offer but am impressed with the creativity! I am looking forward to reading more about how it goes. Please keep us posted and much good fortune to you my friend!

Oh and if you would care to share the company that will lend 90% at a good rate and term I'm all ears. Thanks!

I assume you mean the seller would carry a second mtg, as opposed to some type of lease, as you would be the owner.  Or, are you saying you'd pay/mtg 80% of the purchase price...for the buildings/improvements only, and the seller would retain ownership of the land, doing a land lease to you?  Your lender would have to be on board for this, and that's unlikely.  But, please let us know if your lender will lend to you for a building, on a land lease.

Shaun,

I have done something similar to this. It may be easier to simply ask the current owner to hold a "2nd" instead of a lease on just the land. This may be what you are proposing. I was a bit confused.

80% financing via lender one

20% financing of down payment (current owner is in 2nd place) offer them a 10 year ballon at 4% with a 30 year amort.

If you don't have enough cash flow to cover both of these, you may not be getting a very good deal.

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