Owner financing an 11 property sale, can I get a bank loan for the down payment?

4 Replies

So, my husband and I are newbies and still trying to learn all we can. 

We have met and built a relationship with a fella who is looking to retire and wants to sell his 11 SFH rental portfolio.

We are very interested, and have about 45K for a down payment, but he's wanting 150K down, and he'd finance the rest since he owns these free and clear. 

My question is can I get a loan from the bank for the remaining 105K, and what positions would everyone's notes be in. 

Sorry I'm still trying to wrap my head around all this financing/bank/mortgages stuff. Some of it is clicking though. 

PS he is willing to sell us 2 or 3 of the homes with our down payment, but gosh they are all wonderful prop in great areas and were greedy and want all of them!

Typically, a bank won't lend on the down payment because that puts them in second position without a chance of there being a lot of equity to cover their loan if you default. 

Other options are to try to negotiate with the seller to work with your down payment in return for a little bit higher interest rate, or a little bit higher purchase price. Or, get creative, maybe there is something outside of this transaction that you can offer him. 

You can also look for a private money loan that is OK taking a second position.

Just remember to make sure that all your numbers will still work. Good luck!

Jennifer, that sounds like a pretty sweet deal!  Just to be on the safe side have you done all the research on the rents on these houses and have you seen them?  I think you would have to try and go a personal loan route to get that money.  I have seen on here that people recommend going to a local bank or credit union rather than a big chain.  That way you can present your situation and show that all your ducks are in a row.  You want them to be confident that you will be making money and you will pay them back.  Or do you have some equity in your primary residence you could get out?

Thanks @Cody Steck

@Jeremiah Perry

The rents look good, even slightly under fair market value. And I think I will at least try to see what the local banks would say. Thank you for helping me clear that up. I sure wish I knew someone for a private loan, but this is our first investment, and we just don't know anyone who'd have that kinda cash to loan us for the down payment. 

Cross my fingers....

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