Investor · Windsor, CT · Member since 2018 · 8 posts · 0 votes
Hello everyone!
My partner and I are looking into purchasing a multifamily building (6 unit) in Hartford, CT and trying to come up with some creative ways to put the least amount out of pocket into this deal and still make it a win-win for the seller and us.
One of the things we are exploring is having the seller finance the down payment (20-25%), but not sure how to go about it as I have been told that lenders would not allow the seller to put the down payment (a 20% mtg to the seller and 80% mtg to the lender... essentially us not putting any money or "skin in the game"). But i cant imagine this hasn't been done before.
Has anyone tried/done this before? How did you go about doing it? Or am i approaching this totally wrong and unrealistically?
Currently looking at doing the same thing on an 8 unit here in Orlando. Seller mentioned his 'dream selling price', which he's not asking, and seemed opened to owner financing. Putting together an LOI at his 'dream' price with 0% down, 0% int, amt over 30-35 years. Our reasoning for asking for 0% int., would be that we are paying the interest up front in the means of 'over paying' with the purchase price. The numbers work on 0% down, 10% down and even 20% down with 0% financing. Hoping we can use the sellers 'greed button' and 'pain point' (he self manages and wants to relocate) and make it a win-win for all!
And as @Darin Bowers mentioned, you're saving money on CC as well.
Hope some part of this helps with looking at it creatively. Fingers crossed for ya!
Specialist · Tampa, FL · Member since 2012 · 933 posts · 492 votes
6y
@Christian Rivas Plata, it's definitely been done before. Trying to figure out how to go about doing it is the key. You're right as most lenders will not let you put a 2nd mortgage on the deal while they're in 1st position. I would visit all local commercial savings and loans banks in your market. Let them know exactly what you're looking to accomplish and see if they can assist you with this or at least lead you in the right direction. Hopefully you get the guidance you're looking for on here
Developer · Charlottesville, VA · Member since 2018 · 4k+ posts · 4k+ votes
6y
@Christian Rivas Plata if you can’t find a bank to do the deal you could always use the seller carry as equity and make them an investor instead of note.
Rental Property Investor · Charleston, IL · Member since 2019 · 3 posts · 4 votes
6y
@Christian Rivas Plata
Maybe there’s a scenario where the seller will finance 100% of the deal. You could offer a slightly higher purchase price if they’ll agree to that. You’ll save money on the closing costs because you won’t have loan origination fees or appraisal expenses. And the seller can defer most of the capital gains taxes. Might be a win/win for both parties.
Currently looking at doing the same thing on an 8 unit here in Orlando. Seller mentioned his 'dream selling price', which he's not asking, and seemed opened to owner financing. Putting together an LOI at his 'dream' price with 0% down, 0% int, amt over 30-35 years. Our reasoning for asking for 0% int., would be that we are paying the interest up front in the means of 'over paying' with the purchase price. The numbers work on 0% down, 10% down and even 20% down with 0% financing. Hoping we can use the sellers 'greed button' and 'pain point' (he self manages and wants to relocate) and make it a win-win for all!
And as @Darin Bowers mentioned, you're saving money on CC as well.
Hope some part of this helps with looking at it creatively. Fingers crossed for ya!