Off-market Deal and Need Help with Lending Options!

[Solomon Hikssa]

Hi All,

Need your help. I was in escrow for a 4-unit quad plex for 225K in Portage, MI but the owner just provided an off-market deal to add on his other 4-unit property into the deal for a total packaged price of 420K. Unfortunately, max that I am able to contribute is 20% towards the down payment and multiple portfolio lenders that I spoke with said that they require a minimum of 25%-- a little over my capability. I am trying to ask Owner if he is willing to do seller financing but he is not willing to do and just wants to get rid of the properties.

In need of any fellow bigger pockets members to help with any referrals  to lending companies that lend in Michigan and lend at a lower LTV (20% or less). 

NOTE ABOUT THE DEAL: Property under contract includes two 4 -unit complexes on the same block, both for 430K, in the Portage, Michigan (a grade "A-" or "B" location) area. Both 4-unit properties are identical with 2 bedrooms, one bath, all with attached garage and 2 of the units with an unfinished basement. All units are greater than 900 sq. ft. The complexes have long term tenants. Currently, combined rent is approx $5300 but market rent is approximately (according to 2 different property managers and general comps assessment)  $7,600. Inspection of the first 4-unit property is complete and requires new HVAC and  2 new AC replacements (over 30 years old). Let me know if you need more details. 

[Jerry Padilla]

@Solomon Hikssa 

Conventional requirements are 25% down for a MFR. Do you have money that you can pull from other sources? A HELOC, 401k, Stocks, Bonds? Any funds that are secured by assets can be used towards down payments.

Also you will need money for reserves as well.......

Cash Reserve Requirements;

6 months PITI is required on subject property.

If you have 1-4 financed properties than it is now 2% of all unpaid principle balances.

If you have 5-6 financed properties than it is now 4% of all unpaid principle balances.

If you have 7-10 financed properties than it is now 6% of all unpaid principle balances.

Money must be in account for 60 days or sourced. A HELOC can be used as down payment, but not as cash reserves.

Gift funds are not allowed on Investment property transactions.

[Solomon Hikssa]

@Jerry Padilla: Thank you for the insightful response. I am actually doing a cash out refinance on one of my properties that I have. I am using this as a down payment. We are currently negotiating a seller finance contract, using 10% down.