How can I invest in commercial real estate....

8 Replies

I am wondering how I can invest in bigger deals like commercial multifamily homes and not use my own money. Do I use a commercial loan, and then the down payment come from a private lender, hard money lender and then refinance later to pay it back? Has anyone done this with any success?


As a private lender, I want to see you have some of your own money in the game.  I would not accept a scenario where you have nothing to lose.  I would think other lenders would be the same way.

@Neil Aggarwal  

Hey, I have a deal, nice 12 unit spot, $120,000, assume that is full market value, cap rate is pencils out to 11.5%, walking distance to the university, nice area, Seller will carry a second at 35% for me, you interested in taking the first at 65% LTV with 12% ROI and a 49% equity position, I won't have a dime in it, but will do the deal and manage it, If you want out after a year I'll take you out and payoff your first (I'll have your note purchased at par at the UPB) I can guarantee occupancy for 5 years, will add lipstick to it over the term with my cut and we will sell in 2020. As a private lender, would you be interested?

 @Chad Duncan 

That's how, with knowledge, experience, investor/lenders that trust your judgment, by putting a good or at least decent deal together that allows potential for profits and earnings. You might not put a dime in, but you can take your lender out if they want or need out. :)  

Originally posted by @Bill G.:

As a private lender, would you be interested?

Good point.  The lender on the primary lien would be happy and the seller could just be convinced to take a second for the rest since they get most of their money out. I had not considered that scenario.

Ok. So if I pencil a good deal then I have a better chance at that? What of using the seller to carry a second mortgage to cover the down payment? Does that work out? If so, how do I approach that? 

Originally posted by @Ben Leybovich :

I'm pretty sure I've done a few of these $0 down apartment deals, @Chad Duncan  .  Don't listen to @Bill G. - he doesn't know anything :)

It's always a blend of private and institutional money of some sort, and timing.  Really have to know what you're doing...

Good luck!


Originally posted by @Chad Duncan :

Ok. So if I pencil a good deal then I have a better chance at that? What of using the seller to carry a second mortgage to cover the down payment? Does that work out? If so, how do I approach that? 

Don't get caught up with gurus telling you how to do creative deals,  at least don't pay more than $9.99 for stuff.

You're missing the other parts mentioned, experience, knowledge, trust, a good plan, a take out exit and making it profitable.

I can tell you about dozens of no money in deals, wouldn't do you any good. 1. You aren't me or anyone else. 2. Each deal is different. 3. No transaction can always be replicated in other markets with other owners by other people.

What you are always doing is solving the owner's problem, meeting their needs, you do so at an acceptable level to your needs or you don't do the deal.

I realize everyone wants the 5 steps to wealth that works on any property, there isn't such a thing, doesn't exist.

Before you can be creative and think outside the box you must know what's inside the box, what the rules are, how transactions can be engineered, how to use other assets, monetary assets or your abilities. Your abilities hinge on a foundation of knowledge and I mean real estate knowledge and finance knowledge, not guru tricks.

Newbies keep wanting to go elephant hunting with a slingshot or BB gun, by that I mean they get their hunting equipment from gurus and investor forums full of off the wall stuff. Go to a proper outfitter, get the right equipment, ammunition and learn how to use that, then after you have some experience you can go for bigger game. :)

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