Buy a large multi family with nothing out of pocket?

5 Replies

Hi BP. I’ve been in contact with a new lender who is telling me that his guy is fine with 2nd mortgages and that I can potentially get this 42 unit with nothing out of pocket.. he says his lender will provide an 80% LTV and that if the seller will hold a 2nd mortgage for 20% then I can potentially own the property for nothing out of pocket. This seems too good to be true and it doesn’t feel realistic as my biggest property right now is a duplex and I have no W2 income.. so what do you think? Is this possible? Is he pulling my leg?

@James Gleeson Seems completely possible. Commercial notes are more concerned about the value and cash flow of the property. They won't care about our W-2 income. The asset is what secures the note.

BUT just because something is possible does not make it a good investment. Just really check your numbers. Make sure you can cash flow or add value quickly. Don't get yourself over-leveraged and not be able to make the payments.

If the numbers all work, you have a winner on your hands!

If you don't mind my asking, where did you find the deal? Direct mail, loop net, broker?

If the numbers work, do it and don’t look back. I’ve bought 25 units and have another 64 closing within a month. No cash of my own on anything.
You will need to make sure the loan product can be piggybacked and that the seller is okay with 2nd mortgage position- as the lender will get the 1st position.

@James Gleeson That sounds awesome. Do you have experience in bigger multi units? I'm wondering if they are willing to do this because of your experience or maybe your relationship with them. Also, would you mind sharing the lender willing to do this for you? Thanks for sharing.