5 Unit +- What kind of down payment are you seeing?

4 Replies

I was listening to a podcast the other day and the guy talked about how he found a 6 unit and went to a commercial lender and ending up closing with 100% financing. I have always thought you need 25% min to close on a commercial loan. 

Can someone clarify? 

@Rigo V. I am not sure what type of financing this podcast guest acquired. Was it a hard money loan on a distressed property? Some places advertise that they will lend a certain percentage on the ARV of the property. I personally just got 80% LTV on my most recent acquisition in Berwyn. This is fairly common from some of the small local banks. Most places to advertise 75% LTV as well ,and sometimes you get slightly better terms with less leverage.

The bank that I work with is small (2 branches), and they advertise 80% LTV. Not every place will do 80%, but if you call 10 local banks/credit unions, you will find a few that will.

The podcast you were listening to, possibly they got the principal loan from the bank and maybe a seller carry back for the remainder of the portion?

I recently bought a 14-unit apartment and a local credit union financed 80% LTV at 5%, 25 year amortization, and a 5 year balloon. The appraisal actually came back about $30,000 lower due to an incompetent appraisal company, but the bank still approved 80% of purchase price or 85% Loan to "Value" (Property is definitely worth higher than my purchase price, but the credit union only sees the appraisal as the value)

Like @John Warren said, talk to all the small, local credit unions and banks in the area