commercial lender in northern Colorado no money down

Private Lending & Conventional Mortgage Advice
9yFollow

commercial lender in northern Colorado no money down

Chris Moore
Rental Property Investor · Mountain View, CA · Member since 2015 · 73 posts · 17 votes

Hello everyone, I'm not sure if this is the correct forum, so bare with me.

I have an offer in on an office Building in Northern Colorado. Its a 3 mill asking price with a 800k seller back. So potentially a no-money down situation! I'm having a hard time with a bank that will accept that. I'm offering liens on my other properties to help, but I am getting the feeling big banks don't care. Does anyone have any suggestions? 

Oh and the building was recently remodeled so it's mostly vacant, and will be probably negative cash flow after debt coverage, but has huge potential. 

Thanks for any help!

0Reply
31 views

Most Popular Reply

Bill S.Pro Member
Moderator
Rental Property Investor · Denver, CO · Member since 2013 · 4k+ posts · 2k+ votes
9y
Originally posted by @Chris Moore:

Hello everyone, I'm not sure if this is the correct forum, so bare with me.

I have an offer in on an office Building in Northern Colorado. Its a 3 mill asking price with a 800k seller back. So potentially a no-money down situation! I'm having a hard time with a bank that will accept that. I'm offering liens on my other properties to help, but I am getting the feeling big banks don't care. Does anyone have any suggestions? 

Oh and the building was recently remodeled so it's mostly vacant, and will be probably negative cash flow after debt coverage, but has huge potential. 

Thanks for any help!

 big banks = "NO". You need to find small local institutions (banks and credit unions) or private money. Private money would likely be enticed by getting a share of the proceeds. Pretty much any way you look at it, you would use short term (1-2 year and expensive) money to buy and operate until the property is rented. Then you get longer term permanent financing after the property is stabilized.

I do find the idea that the seller is willing to carry back 100%. That is a trick used by sellers to attract novice investors into paying above market prices. If they can offer $800k in carry back, why don't they just rent up the property and do a conventional sale with an occupied property. These kind of deals smell fishy. Do your due diligence!!!

2Reply
See this reply in the discussion

6 Replies

Jump to latestLatest
  • Marty JohnstonPro Member
    Lender · Wauwatosa, WI · Member since 2016 · 571 posts · 204 votes
    9y

    @Chris Moore, You're going to run into issues here. If there's one common thing among all commercial lenders, its that they want you to have some skin in the game... Some lenders will allow a seller second, but only up to a certain percentage - again, to make sure that the borrower has some skin in the game. You will likely need to find a private lender to fund this deal.

    Also, since the property is vacant and not producing income, you will not qualify for permanent financing. You will need to get into a Bridge loan for acquisition of the property, and then once stabilized, refinance into a permanent loan.

    I wish you the best!

    [email protected]414-600-0123
    0Reply
  • Chris Moore
    OP
    Rental Property Investor · Mountain View, CA · Member since 2015 · 73 posts · 17 votes
    9y

     Thanks Marty, ya I've been hearing "skin in the game" a lot, but I don't know what to offer them besides equity in my other properties, sadly I don't have an extra 300k sitting around to give the skin they want. I guess private money is what I will have to do. Do you have any referrals? 

    0Reply
  • Bill S.Pro Member
    Moderator
    Rental Property Investor · Denver, CO · Member since 2013 · 4k+ posts · 2k+ votes
    9y
    Originally posted by @Chris Moore:

    Hello everyone, I'm not sure if this is the correct forum, so bare with me.

    I have an offer in on an office Building in Northern Colorado. Its a 3 mill asking price with a 800k seller back. So potentially a no-money down situation! I'm having a hard time with a bank that will accept that. I'm offering liens on my other properties to help, but I am getting the feeling big banks don't care. Does anyone have any suggestions? 

    Oh and the building was recently remodeled so it's mostly vacant, and will be probably negative cash flow after debt coverage, but has huge potential. 

    Thanks for any help!

     big banks = "NO". You need to find small local institutions (banks and credit unions) or private money. Private money would likely be enticed by getting a share of the proceeds. Pretty much any way you look at it, you would use short term (1-2 year and expensive) money to buy and operate until the property is rented. Then you get longer term permanent financing after the property is stabilized.

    I do find the idea that the seller is willing to carry back 100%. That is a trick used by sellers to attract novice investors into paying above market prices. If they can offer $800k in carry back, why don't they just rent up the property and do a conventional sale with an occupied property. These kind of deals smell fishy. Do your due diligence!!!

    2Reply
  • Chris Moore
    OP
    Rental Property Investor · Mountain View, CA · Member since 2015 · 73 posts · 17 votes
    9y
    Originally posted by @Bill S.:
    Originally posted by @Chris Moore:

    Hello everyone, I'm not sure if this is the correct forum, so bare with me.

    I have an offer in on an office Building in Northern Colorado. Its a 3 mill asking price with a 800k seller back. So potentially a no-money down situation! I'm having a hard time with a bank that will accept that. I'm offering liens on my other properties to help, but I am getting the feeling big banks don't care. Does anyone have any suggestions? 

    Oh and the building was recently remodeled so it's mostly vacant, and will be probably negative cash flow after debt coverage, but has huge potential. 

    Thanks for any help!

     big banks = "NO". You need to find small local institutions (banks and credit unions) or private money. Private money would likely be enticed by getting a share of the proceeds. Pretty much any way you look at it, you would use short term (1-2 year and expensive) money to buy and operate until the property is rented. Then you get longer term permanent financing after the property is stabilized.

    I do find the idea that the seller is willing to carry back 100%. That is a trick used by sellers to attract novice investors into paying above market prices. If they can offer $800k in carry back, why don't they just rent up the property and do a conventional sale with an occupied property. These kind of deals smell fishy. Do your due diligence!!!

    You are the second person to tell me to be cautious as it smells too good to be true. I actually really appreciate that as I have a tendency to get sucked into the upside of things. 

    The seller back is one he has from the previous owner and will assign to me. The story I have from the broker (who is a partner of someone I trust) is that due to some recent health issues he's retiring and wants out. 

    0Reply
  • Chad Bowman
    Real Estate Agent · Fort Collins, CO · Member since 2014 · 16 posts · 6 votes
    9y

    I'd be interested in who, with making some big adjustments, would take on lending this deal. I don't know, but I too feel like 0% down is fishy.

    0Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    9y

    @Chad Bowman  I would not say fishy  just not a plausible loan scenario to any for real lending institution.. this one if its a great deal needs equity partners.. then a bank.

    also I would try to pay off the seller carry back and hammer down the payoff amount.

    Podcast Guest on Show #222
    JLH Capital Partners51 Review
    WebsiteView Page
    1Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free