Investor · Glendale, AZ · Member since 2015 · 113 posts · 47 votes
There is a great commercial deal for around $350k that I am trying to purchase. I hate to walk away, but it's a tad out of reach. As a last ditch effort I wanted to reach out to see if anyone has any ideas with 10% down. Here is my scenario:
I own two houses with a combined equity position of about 150k
Have a great job
Have 10% down
Can get a realtor commission 3% that I can apply towards the deal
The dilemma: the deal won't last long, but I want to try to see if anyone has any creative ideas to get financing? The seller will only finance 25k. Is there such a thing as a 10% dow money loan on commercial real estate?
Investor · Milwaukee, WI · Member since 2014 · 811 posts · 420 votes
10y
Also what am I missing here?
You need 70k for a down payment. You said you have 10% (35k). Plus the seller financing 25k. Plus the equity in your other houses. Seems like you have more than enough for the down payment.
Investor · Glendale, AZ · Member since 2015 · 113 posts · 47 votes
10y
I am attempting to use my equity, but the problem is even with 150k in equity a HELOC will only loan 75-80% of value, so 20% on my homes minus debt I would be able to get about 80k. I think the other problem would be is I can get a loan to get another loan, unless I am wrong. Can I use a HELOC to qualify on a loan?
Rental Property Investor · Vancouver, WA · Member since 2014 · 308 posts · 144 votes
10y
I can tell you in my experience, I haven't found a single commercial lender that will do less than 10% down. Sorry buddy, but if you want this deal to happen, you're likely going to have to come up with the cash some how. Believe me, I've had a few deals go south because of this identical situation, and it sucks. :(
Investor · Milwaukee, WI · Member since 2014 · 811 posts · 420 votes
10y
John Hyatt
Yes, you can use a HELOC for a down payment.
You can also ask the lender if they will use your equity in the other houses as collateral for a down payment.
Investor · Milwaukee, WI · Member since 2014 · 811 posts · 420 votes
10y
Also what am I missing here?
You need 70k for a down payment. You said you have 10% (35k). Plus the seller financing 25k. Plus the equity in your other houses. Seems like you have more than enough for the down payment.
I am attempting to use my equity, but the problem is even with 150k in equity a HELOC will only loan 75-80% of value, so 20% on my homes minus debt I would be able to get about 80k. I think the other problem would be is I can get a loan to get another loan, unless I am wrong. Can I use a HELOC to qualify on a loan?
As mentioned by others, the answer is: yes. Where people have trouble with this approach is when their deposit-getting loans are NOT backed by existing equity; because Lenders do require to know how much they already owe, vs how much they're worth. In your case, the Lender shouldn't care if you used your HELOC on holidays etc (but of course, you won't have)! Go get it! All the best...
Grove City, OH · Member since 2016 · 167 posts · 66 votes
10y
you can also look into portfolio products and bridge loans as well. Essentially you can lump one of the houses with the new project into one loan. Using the cash and the equity in the house to account for 20% equity across the entire loan (both places). Sounds like it'd time to go talk to some lenders asap and see what they will do to get your business.