Investor · Member since 2020 · 44 posts · 19 votes
Hey Amazing Real Estate Rock Stars,
I'm doing an off market deal and have been offered seller financing.
It's a multi house deal and all the houses have cesspools that need to be upgraded.
The town requires septics to be upgraded within 6 months of transfer of ownership so I had proposed an installment plan offer, doing a house every 18 months and refinancing out to BRRRR the money into the next house. I don't have enough cash to do all the septics, a down payment and still have sufficient reserves.
Just wondering if it might work to get a mortgage for part of it which would take care of down payment and then some, seller financing for the rest and then do all the septics at the same time.
Does anyone have experience combining seller financing with a mortgage? Thanks!
Investor · Clairemont, CA · Member since 2011 · 3k+ posts · 2k+ votes
5y
Can you, sure there's always someone who will lend on some specific scenario if you offer enough return. The specific metric you are looking for is the lender's 'Combined Loan to Value' or CLTV. This is the total borrowed per property that they will still provide a loan against for their portion.
For example, let's assume 100K purchase price with a 70/90 LTV/CLTV. You find a HML for 70% LTV meaning they would lend you 70K, and your borrower agrees to carry the rest. But your HML CLTV is 90% so they are saying you must put 10% down even if in theory you could borrow the full amount. So you'd end up with a 70K 1st position HML (70% LTV), a 20K 2nd position owner carry (90% CLTV) and a 10K cash down payment in this scenario.