New York, New York (NY) · Member since 2017 · 13 posts · 2 votes
Looking for some advice and or creative ideas on a commercial property I'm in contract on. Seller has offered to hold 10 to 15% of the property at a great rate for 8 years. I'm being denied a mortgage because I'm only putting down 10% and there is a second mortgage to the owner. The commercial property is one commercial on the main floor and 3 residential units above it. Very cash flow positive even with 2 mortgages.
Does anyone know if Commercial Lenders would create a mortgage on 75% with the buyer putting down 10% and the seller holding 15%? Or if Commercial Lenders that would be open to just 10 or 15% down on a commercial property?
I would look to a local lender and throw them a bone such as refi'ing your other properties with them if they get this deal done. I say it a lot but I would rather pay a little higher to know that my lender will always finance my deals. I believe you should build a relationship with a good local lender.
I contact my lender when I am under contract then again when I know the closing date. It's nice not to have to submit miles of paperwork with new lenders each time.
@Tom Anderson great job on finding the property and working with the seller to create a good deal for both parties.
You may need to ask your lender, or shop around to other lenders. Typically a lender wants to see a net worth of at least the value of the loan, and liquidity of 6 months of payments. If you don't meet those requirements, then you may need to bring someone on who does.
Talk to some other lenders, and pick their brains on what their requirements are.
@Tom Anderson I would ask the seller to finance the whole thing for a few years until you build up your equity/down payment. anther option is to not go to banks. they are the cheapest place to borrow from but they want to know everything about you, they are conservative (ie: want 20% or so down payment), who knows in the big pile of paperwork it probably says you are signing your first born away.
i would need to know more about the property and about you before i can recommend a lender. intentioncapital.com is a good mortgage broker. Jeff is the person over there that you would want to talk to. His minimum is 1 million. He told me a long time ago that it takes the same amount of effort to raise a million as it does to raise 40k.
I would look to a local lender and throw them a bone such as refi'ing your other properties with them if they get this deal done. I say it a lot but I would rather pay a little higher to know that my lender will always finance my deals. I believe you should build a relationship with a good local lender.
I contact my lender when I am under contract then again when I know the closing date. It's nice not to have to submit miles of paperwork with new lenders each time.
In 2015 I had an approved loan through Patch of Land who are willing to work with borrowers if the deal is right. They are a HML so the rates are quite a bit higher than the banks, but within that context I thought they were fair. You should put the deal in front of them. My deal did not work out, but I appreciated their professionalism.
Best of luck!
I am not associated with Patch of Land in any way and will not receive any compensation from them for this post. I do not currently have a loan through them.
You will get a lot more interest in this deal from commercial lenders as soon as you commit to putting 25% - 30% down. Your phone will not stop ringing as long as the property cash flows. Bottom line, you need more skin in the game to get this deal done, bring in a partner, or see if the seller is willing to carry the note until you are able to complete a Cash Out Refinance in about 12 months. Good luck.
You will get a lot more interest in this deal from commercial lenders as soon as you commit to putting 25% - 30% down. Your phone will not stop ringing as long as the property cash flows. Bottom line, you need more skin in the game to get this deal done, bring in a partner, or see if the seller is willing to carry the note until you are able to complete a Cash Out Refinance in about 12 months. Good luck.
You wouldn't be able to CORF for more than 65 or 70% of ARV, the deal would have to have a significant value add otherwise he's in the same place just 12 months later.
There are banks that can do it - you need to call around.
I see what you are saying, but he will be in a completely different place. He will be the owner of the property. He will have control of the property. Definitely, a different place.
You're looking at having to put down 20% with the seller taking a 2nd for anything the lender won't provide. Most national lender have cltv restrictions to 80%.