We are looking at a 100 unit property with an assumable loan. With the current loan we would need to raise too much capital to get a good cash on cash return so I started looking for a supplemental loan. The loan broker confused me on how this would work. I was under the impression that if you assumed the loan, you could then get a supplemental loan on top of this for some portion of the difference between purchase price and the assumable loan balance. He made it sound like this was not the case, but that the supplemental loan would replace the assumable loan. This does not help because the supplemental loan only goes up to 70%. Anyone have some insight, or suggestions?
A supplemental loan sounds like a 2nd lien, although I've never seen the term "supplemental loan."
A purchase loan that replaces, or pays off, the loan on the property would be a 1st lien. I've never heard of this being called a supplemental loan.
Most commercial loans are going to be in the range of 70% LTV, with 30% of the funds coming from your own capital. I am not an expert on commercial loans, but 2nd loans are far less common these days. Even when they are offered, a low CLTV, or combined loan to value ratio, is still going to be common. So maybe you can find a lender willing to do a 2nd, but they will still want the max loan to value to be around 70 - 75%.
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