Structuring a Small Multifamily Deal With Seller Carry + Bridge Where Do People Find

[Eduardo Cambil]

Hi everyone,

I wanted to share a real situation I’m currently navigating and see how experienced investors typically solve this piece of the capital stack.

I’m working on acquiring a workforce housing property in Pecos, Texas that is already stabilized and producing solid cash flow. The property serves the energy workforce market in the area.

Property overview

• 18 furnished units + manager residence
• Built in 2017
• Located in Pecos, TX
• Workforce housing model (weekly/monthly rentals)
• Stabilized operations

Financials

• Purchase price: $800,000
• Recent third-party appraisal: $1,200,000
• Trailing normalized NOI: ~$100,000
• Annual revenue: ~$268,000

So from a leverage standpoint, the deal is actually fairly conservative if viewed against value.

Loan request

We’ve been seeking:

• Senior bridge loan: ~$520,000
• 65% LTV of purchase price
• Interest-only
• 12–24 month term
• Exit: refinance into long-term DSCR loan once stabilized further

Seller structure

Seller is flexible and willing to carry the remainder.

Proposed structure:

• Senior loan: $520K
• Seller carry: $280K fully subordinated

Seller note terms could be:

• principal-only monthly payment ($1,200–$1,500)
• balloon at refinance

So the deal itself works operationally.

Where things get difficult

What I’ve encountered talking to lenders:

1️⃣ Most bridge lenders want borrower cash in the deal
Even with seller carry, they want "skin in the game."

2️⃣ Many lenders underwrite strictly off purchase price, not appraised value.

3️⃣ Origination fees are extremely high
Typical quotes I've received:

• 12–14% interest
• 5–6 points origination
• 12-month term

4️⃣ Some lenders require reserves ($100K+), which defeats the purpose of the structure.

5️⃣ DSCR lenders generally say:

“Come back after seasoning or after you own the asset.”

The real gap

The deal works if the capital stack is:

Senior loan: $520K
Seller carry: $280K

But lenders are effectively asking for an additional $50K–$100K borrower cash injection, which is the piece I’m trying to solve.

So my question to experienced investors:

Where do people typically source that “gap” capital in deals like this?

Possibilities I’ve considered:

• gap lenders
• mezzanine debt
• preferred equity investors
• transactional funding
• bringing in a small LP
• collateralizing another property

But in the small-balance commercial space ($500K–$1M loans), I’m finding very few structured options.

Have you seen structures like this actually close?

Specifically curious about:

• lenders comfortable with seller carry as the equity piece
• gap capital sources for small multifamily deals
• investors who specialize in bridge + seller carry structures

Would appreciate hearing how others have solved this.

Thanks in advance — always learning from the community here.

[Don Konipol]

Quote from @Eduardo Cambil:

Hi everyone,

I wanted to share a real situation I’m currently navigating and see how experienced investors typically solve this piece of the capital stack.

I’m working on acquiring a workforce housing property in Pecos, Texas that is already stabilized and producing solid cash flow. The property serves the energy workforce market in the area.

Property overview

• 18 furnished units + manager residence
• Built in 2017
• Located in Pecos, TX
• Workforce housing model (weekly/monthly rentals)
• Stabilized operations

Financials

• Purchase price: $800,000
• Recent third-party appraisal: $1,200,000
• Trailing normalized NOI: ~$100,000
• Annual revenue: ~$268,000

So from a leverage standpoint, the deal is actually fairly conservative if viewed against value.

Loan request

We’ve been seeking:

• Senior bridge loan: ~$520,000
• 65% LTV of purchase price
• Interest-only
• 12–24 month term
• Exit: refinance into long-term DSCR loan once stabilized further

Seller structure

Seller is flexible and willing to carry the remainder.

Proposed structure:

• Senior loan: $520K
• Seller carry: $280K fully subordinated

Seller note terms could be:

• principal-only monthly payment ($1,200–$1,500)
• balloon at refinance

So the deal itself works operationally.

Where things get difficult

What I’ve encountered talking to lenders:

1️⃣ Most bridge lenders want borrower cash in the deal
Even with seller carry, they want "skin in the game."

2️⃣ Many lenders underwrite strictly off purchase price, not appraised value.

3️⃣ Origination fees are extremely high
Typical quotes I've received:

• 12–14% interest
• 5–6 points origination
• 12-month term

4️⃣ Some lenders require reserves ($100K+), which defeats the purpose of the structure.

5️⃣ DSCR lenders generally say:

“Come back after seasoning or after you own the asset.”

The real gap

The deal works if the capital stack is:

Senior loan: $520K
Seller carry: $280K

But lenders are effectively asking for an additional $50K–$100K borrower cash injection, which is the piece I’m trying to solve.

So my question to experienced investors:

Where do people typically source that “gap” capital in deals like this?

Possibilities I’ve considered:

• gap lenders
• mezzanine debt
• preferred equity investors
• transactional funding
• bringing in a small LP
• collateralizing another property

But in the small-balance commercial space ($500K–$1M loans), I’m finding very few structured options.

Have you seen structures like this actually close?

Specifically curious about:

• lenders comfortable with seller carry as the equity piece
• gap capital sources for small multifamily deals
• investors who specialize in bridge + seller carry structures

Would appreciate hearing how others have solved this.

Thanks in advance — always learning from the community here.

Trying to get into a deal with no money of your own is always a significant challenge.  It starts with evaluation of the property, and what YOU bring to the table. 

The most significant feature of the property is that when the industry hits the recession side, your property value drops 50 -75%, and you have no users, so very negative cash flow.  This isn’t like a 12.5cap on a class B apartment building in a major metro area.  This is high risk well beyond current financials.  

Now on to what you bring to the table.  Well, you bring the deal.  But is $800,000 a unicorn?  A price nobody else can achieve for a similar property?  Or is it the REAL MARKET PRICE of this type of asset where the appraiser has mistakenly evaluated the cap rate?  I don’t know, but my experience has been that even MAI designated appraisers can miss the mark by a significant amount. 

Secondly, what’s your experience in real estate investing?  Do you have a verifiable track record of success?  Do you have education in real estate, finance, or business in general.  Should an outside investor trust you with their money?  Have you ever managed a similar property?  Will you live in Pecos?

Passive investors invest to earn 15-25% annually in syndications.  Can your deal provide that kind of return to a “money man”?  

All the points you’ve discovered about lenders are true, and that’s for the ones with the MOST liberal loan policies.  Most wouldn’t consider this deal without the borrower having 30% down payment, in cold cash. 

Back almost 50 years ago, when I started, we used to solve this issue by using a “second mortgage crank”, exchange of “services”, recreational lots as down payments, substitution of collateral, and subordination agreements.  Now doing this without lenders knowledge is mortgage fraud, even if you could find a title co to do it, which since the consolidation of title insurers into 15 companies you can’t. 

Here’s something I did about 20 years ago on a deal I was trying to syndicate that was outside my area of expertise; I hired a CRE consultant to do a feasibility study and that gave the investors confidence to invest in my project