I want to put 50k down on owner financed deal, but only have 20k, what should I do?

4 Replies

Hi Folks,

As the title suggests, I'm looking at an owner finance deal (6 residential units plus 3 commercial spaces,485k asking price) and I think they'd consider an offer with 50k down. I have about 20k available at the moment and I'm wondering what my best bet might be for the additional 30k. Will a hard money lender fund a deal like that? Maybe do a 35k loan from a crowdfunding site like Prosper or Lending Tree? Should I make the offer and then come up with the funds, or wait till I have funds? Obviously time is an issue as I'd like to make that offer and get the place under contract asap. Other options/ideas that I'm missing? Thanks!

You're asking someone to fund a second mortgage when the LTV on the first is over 90%. Your personal skin in the game would be around 4%. I cannot imagine any actual lender funding this, so a crowdfunding site might be your best bet. Have any credit cards you can take zero/low interest advances against?

Whats your market like? If its competitive he might not even consider an owner financed offer even if you had all of the cash ready to go.

I know people are against this, but if the numbers work and you can make the payments, get 1 or more credit cards, use the balance transfer option for 0% interest for 9-18 months and use that as the part of the payment that you need. If you open multiple credit cards at the same time they wont know about each other. 

This would work if he is going to OF. But if you were going to seek conventional funding it would NOT work because the bank would ask you where your down payment was coming from. You would have to show them all of the money in your bank account to prove you had it. If you were were planning on using credit cards it would make getting the loan near impossible unless the income from the investment was high enough to offset the monthly credit card payments.

I know a lot of people are against using credit cards and Ill say that this should definitely be your last option but it will work as long as you are responsible and take all of your extra income to pay down the debt as fast as possible. If you pay them off in the introductory period that means you just borrowed $35k for free!

Ive done it, it works.

Thanks for the comments @Richard C. and @James Klafehn ,

Yeah, I agree that it seems unlikely that a traditional hard money lender would fund this. Seems like I either need a partner or a private money lender who isn't really looking to be in first position, or personal loan/credit cards strategy.  Good to know that you've done the credit advance option with success. 

Thanks for the input.

Possibility of doing your available 20k down with a higher interest rate? Or offer your 20k down with a higher purchase price. Make sure your numbers work though! Then make the numbers work for you!

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