Creative finance question - seller finance w/ hard money

4 Replies

I have an off market multi family, mixed use, and single family rental portfolio with major upside potential in a sought after area. The seller offered me 30% down and 6% interest when I inquired about seller financing. I am in the midst of flipping 7 properties and the majority of my liquid funds went to down payments on my hard money loans for these flips. I am about to sell 3 of my flips, but I probably won't see that money back for at least 2 months. Do you have any ideas on how to put this deal together? At a 15% cap, my offer is approx $742,000. I can definitely get an equity partner involved. Do you think a hard money loan is feasible if the seller is in first position holding the note?

@Liz Kazeva the seller would have to take a 2nd position. I do t think a lender is going to take a second. The only way he taking a 1st is if he is the lender. Seller financing. Maybe you can work something out with the owner at let’s say 6% over X amount of years. Then if possible refi the Property to payoff the current owner.

Interesting topic.  I'm in the same boat on a 2.5 mil property.  Seller wants 250k down, 130k annually, and will carry the note for 20 yrs.  Liquid is tied up so I'm looking for the 250k and was thinking hard money.  Sounds like my only "alternative" option would be to go back to the seller and try to get him to carry an additional 250k.

HML will not take a 2nd. The seller's actually offering pretty good terms for that kind of asset. Maybe you can try asking if the seller would be willing to be in 2nd position if hard money provided 70% down on a 1st.

What does your hard money loan for your flips look like?  How much down payment are you putting in, and are you financing the rehab on them?  It could be worth it to consider refinancing some of your flips to get enough money for the 30% down.

Those are good questions Nghi. I had a chat with a new HML on Friday, and he is offering 100% financing. The seller really wants out of the rental business. I can't imagine him saying yes to second position. I feel like I might have to get an equity partner or do 100% hard money.