Is This Deal Suitable For Private Money, Hard Money or Bank Loan?

6 Replies

Good day. 

Who's an ideal lender (private, hard money, bank, etc.) to finance a purchase where the seller agrees to hold a 2nd at 25%?

I just got an opportunity to acquire two very profitable investment properties, one 6-unit and one 7-unit in NJ. The purchase price for both properties is $300K and the seller will hold $75K. All of the 13 units are occupied and the NOI is $65K. Being these are commercial properties - the value is based on cash flow. As a result, the LTV would be 38%.


The deal is under contract and ready for funding.

Who should I approach to fund this purchase?

What financing options do you have?  Do you have any existing relationships with a bank that is willing to give you a commercial loan or someone with private money that wants to partner with you?  

I can tell you how I would fund it if I had that deal.  I would use my line of credit or cash to fund the down payment and secure the rest on a commercial note from my bank.  

Most private and hard money lenders that I know will not permit seller financing as a second position (or first) and they want the borrower to bring some cash to closing.   If you find a lender who will permit 25% seller financing and no cash by the borrower to close, please let me know!

Originally posted by @Matt A. :

What financing options do you have?  Do you have any existing relationships with a bank that is willing to give you a commercial loan or someone with private money that wants to partner with you?  

I can tell you how I would fund it if I had that deal.  I would use my line of credit or cash to fund the down payment and secure the rest on a commercial note from my bank.  

I could possibly raise private money. Though, I think bank financing would be more likely for this purchase price. No commercial relationships. The lenders I know are on the residential side. I approached a few banks and they are saying the seller held 2nd isn't going to be approved. Ok. That makes sense. Thank you. 

Originally posted by @Ann Rosen :

Most private and hard money lenders that I know will not permit seller financing as a second position (or first) and they want the borrower to bring some cash to closing.   If you find a lender who will permit 25% seller financing and no cash by the borrower to close, please let me know!

Right. This is the issue I'm running into. I'm on the prowl to find someone that'll fund though. I will definitely share the lead upon discover. 

What about a line of credit to fund the 25% instead, and refi  at 6 months?

Or, if cash at close (private, card, LOC, etc), followed by a 2nd a month later? I'm not sure how a lender would feel about that, but it's still cash to close and no immediate second.

Originally posted by @Gagan P. :

What about a line of credit to fund the 25% instead, and refi  at 6 months?

Or, if cash at close (private, card, LOC, etc), followed by a 2nd a month later? I'm not sure how a lender would feel about that, but it's still cash to close and no immediate second.

All viable options to consider. I'll work these strategies as well. Thank you.