How do I fund this?? Every way seems a dead end so far

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How do I fund this?? Every way seems a dead end so far

Nicholas Morgan
Cincinnati, OH · Member since 2018 · 85 posts · 29 votes

Hey everyone! I'm desperately trying to fund a deal and time is of the essence! Here are the details of the property: 

Triplex listed for 155k

Units/Rents:

2/1 - $650/mo

2/1 - $650/mo

3/1 - $750/mo

All units will be empty once the owner moves out. The 2 bedroom units need zero work and are rent ready. I believe each unit could be bumped by $100/mo based on rents in area/demand. But I've been running numbers at current just to be conservative. The 3/1 needs to be finished as it's in the middle of a remodel.

My wife and I want to live in the 3/1 unit for a house hack because it's closer to where we want to be in the city. We would work on finishing the 3/1 unit until we've fulfilled the 12mo living at our current residence. 

Here are the details of my situation:

- I purchased my first SFR / primary residence in October 2018 (~7months ago) with a 3% downpayment conventional loan with the agreement I would live in the property for 12 months

- It seems getting a new low-downpayment loan will be difficult/impossible from a lender due to not fulfilling the 12 month duration in my current residence

- the seller owns the triplex free and clear (paid cash for it 17 years ago) 

- the seller wants out bad. Starting crying when discussing with her because she just wants to move near her grandkids after her husband passed away 6 months ago. 

- I only have $10k to spend to acquire the property 

- Looking at seller financing and with ~6% in realtor fees my 10k would only just cover her realtor fees and wouldn't leave her much of cash-in-hand

- I want this to be a win/win for both of us. She gets an income (which she doesn't have right now) and I get a property to move into after ~6 months

- I feel like if I could go to her and say I can close in 10 days, I could get the price reduced even more. She wants out so bad.

Any advice/thoughts? 

I've looked into a personal loan for a larger downpayment for seller financing. That may work. It would be ideal if a private lender wanted to do a 15 or 30 year mortgage with me. Then there'd be no hassle with banks and such. I think there's an option to refinance out of a private loan or similar in the future. This place was listed at 175k originally and she just dropped to 155k to get rid of it quickly. With the under market value rents it produces  $2050/mo ...If everything gets bumbped up, it would make $2350/month....however I'd live in a unit so it'd really make for me $1300/mo or $1500/mo if rents get raised. 

thanks in advance! 

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Chris MasonPro Member
Moderator
Lender · CA · Member since 2015 · 9k+ posts · 10k+ votes
7y

This is totally a model match for seller financing. Max out a credit card, do what it takes to put $5k or $10k in her pocket for a win. Don't overthink this. Fannie Mae will not be involved in this transaction, so none of those pesky rules matter. 

Interesting that she has a Realtor representing her, but you are speaking with her directly. 

In 6 or 12 or 36 months when you decide to refinance into a Fannie loan, be aware that private one-off lenders often balk or spaz at the "verification of mortgage" and "payoff demand" requests, which can in turn delay your refinance and/or blow your rate lock. 

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  • Chris MasonPro Member
    Moderator
    Lender · CA · Member since 2015 · 9k+ posts · 10k+ votes
    7y

    This is totally a model match for seller financing. Max out a credit card, do what it takes to put $5k or $10k in her pocket for a win. Don't overthink this. Fannie Mae will not be involved in this transaction, so none of those pesky rules matter. 

    Interesting that she has a Realtor representing her, but you are speaking with her directly. 

    In 6 or 12 or 36 months when you decide to refinance into a Fannie loan, be aware that private one-off lenders often balk or spaz at the "verification of mortgage" and "payoff demand" requests, which can in turn delay your refinance and/or blow your rate lock. 

    4Reply
  • Robert Purcell
    Specialist · Livonia, MI · Member since 2018 · 35 posts · 16 votes
    7y

    I don't totally understand where the agents are in this (sounds like you're direct to seller), but if some commission is needed, you'll have to do that minimum.

    But ask what she needs to walk. Maybe that's just a little, or maybe it's nothing up front. Maybe you work out $X more monthly for the first 12 months as the "down payment". See what she needs today, and make that happen.

    1Reply
  • Nicholas Morgan
    OP
    Cincinnati, OH · Member since 2018 · 85 posts · 29 votes
    7y

    @Robert Purcell

    When I showed up with my agent to view the property the owner was there and started talking and talking. This is where I gathered most of my information.

    She's hoping to use the proceeds from this sale to go towards a house near her grandkids. Her hope was to pay cash for this new house with the money from this sale. That's why seller financing is going to be a bit of a stretch to get her to agree to it.

    How do I "max out my credit card" for this? Like use a cash advance? Or is there a way to use a cc at closing?

    0Reply
  • Tom S.
    Real Estate Investor · Burlington, VT · Member since 2010 · 2k+ posts · 1k+ votes
    7y

    @Nicholas Morgan  Beyond a credit card, you can look to get a personal loan from our bank, margin acct for any stocks you own, or even a 401k loan if you're comfortable with that.  All would be pretty quick ways to get more cash into her pocket and set up a seller financed deal.

    Regarding credit cards, yes there are cash advances, but paypal, venmo etc would be better options (the latter two would charge you 3%, but that's still not bad overall).  You can set up your Payal/Venmo acct and have your wife set up one, and send money from one to the other, and use the credit card as the funding source.  

    Good luck!

    2Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    7y
    Originally posted by @Tom S.:

    @Nicholas Morgan  Beyond a credit card, you can look to get a personal loan from our bank, margin acct for any stocks you own, or even a 401k loan if you're comfortable with that.  All would be pretty quick ways to get more cash into her pocket and set up a seller financed deal.

    Regarding credit cards, yes there are cash advances, but paypal, venmo etc would be better options (the latter two would charge you 3%, but that's still not bad overall).

    Good luck!

     I wonder if you can use a loan from your retirement account to buy a home your going to live in??  something tells me that might not fly don't know for sure.

    but seems to me have to sell existing home to free up mortgage slot so U can buy this one.. but with 10k your going to have a tough time you probably will be underwater on a home you only put 3% down on in 2018.. 

    tough one.

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  • Dennis M.
    Rental Property Investor · Erie, PA · Member since 2018 · 6k+ posts · 9k+ votes
    7y

    Realtors , realtors fees , agents ??? What !!that’s not part of seller financing bro . Cut out the middle man . Get those folks out of the deal altogether . Get yourself 10% - 15k and start seriously negotiating with the seller personally about how to get this done and under a land contract .This is a primo arrangement for seller financing and the numbers look promising

    0Reply
  • Nicholas Morgan
    OP
    Cincinnati, OH · Member since 2018 · 85 posts · 29 votes
    7y

    @Dennis M.

    Haha I agree! But I found it on the MLS thru my agent. Id love to tell her to get rid of the agents, but wouldn't feel right doing that. Especially since it was my agent that sent me the listing. If I had found this off market, it would be amazing. The realtor fees are definitely making this difficult!

    0Reply
  • Cody L.
    Rental Property Investor · San Diego, CA · Member since 2013 · 3k+ posts · 4k+ votes
    7y
    Originally posted by @Nicholas Morgan:

    @Dennis M.

    Haha I agree! But I found it on the MLS thru my agent. Id love to tell her to get rid of the agents, but wouldn't feel right doing that. Especially since it was my agent that sent me the listing. If I had found this off market, it would be amazing. The realtor fees are definitely making this difficult!

    Friends? Family? Sell blood or plasma? Go to an local rei club? Talk to hard money guys? I promise money is out there. 

    I did a LOT back in the day when I was starting in order to get deals I knew were solid. It’s not easy but it’s not impossible. 

    Just make it happen man. If she wants to sell that bad she’ll find someone else to offer her a low ball and take it down. And you’re regret it for a long time  

    Or hell have someone on this site wrote a check to take it down and off the market and do some lease sale back to you. The #s work. 

    0Reply
  • Nicholas Morgan
    OP
    Cincinnati, OH · Member since 2018 · 85 posts · 29 votes
    7y

    I think I'm going to offer her this tonight:

    I will pay all of her closing fees which will be nearly $10k and then I will borrow (don't know from who yet!) $5k to give her some cash in hand.

    I then will make a monthly payment of $900/mo for the next 15 years. Which would still be cheaper than a conventional bank loan because of PMI. That would equate to 162k paid out over the 15 years + the ~15k for the property. So essentially paying 177k for the triplex. I think she'll like the sound of that. Only hangup would be the low cash in hand amount.

    I'd like to borrow more so I could give her more cash in hand, but I'm trying to find where to borrow that from.

    What do you think of that offer package?

    I didn't get into sale price and interest on loan and all that because I don't want to confuse her. I think by just saying "I'll pay you 900/mo hassle free which equates to 177k in total paid" is much more inviting and easy to understand.

    Thanks everyone! Let me know your thoughts!

    0Reply
  • Tim Herman
    Member since 2018 · 2k+ posts · 1k+ votes
    7y

    @Nicholas Morgan have you considered an option. $10000 non refundable option, Purchase price 1 year from now.@ $155000. Credit the option money toward down payment. Guarantee her $2000 per month rent and if you get more put it in your pocket. Realtors won't like it but the seller will. She walks with $10000 and $2000 per month income. Gives you time to get financing. Realtors will get paid a year from now.

    2Reply
  • Nicholas Morgan
    OP
    Cincinnati, OH · Member since 2018 · 85 posts · 29 votes
    7y
    Originally posted by @Tim Herman:

    @Nicholas Morgan have you considered an option. $10000 non refundable option, Purchase price 1 year from now.@ $155000. Credit the option money toward down payment. Guarantee her $2000 per month rent and if you get more put it in your pocket. Realtors won't like it but the seller will. She walks with $10000 and $2000 per month income. Gives you time to get financing. Realtors will get paid a year from now.

    Let me see if I understand this propertly...

    I giver her $10k which buys me the opportunity to purchase the property 1 year from today for the $155k. In the the next year I give her the $2k in rent each month which goes towards the downpayment of the 155k purchase price. 

    In one year from now, I would then get a bank loan for the remaining balance due her? i.e. $155k - $10k - ($2k*12months)  = $121k 

    Is that correct? 

    Thanks for the info. I haven't considered this idea. 

    So here's another piece of info I didn't discuss just to not muddy the water any. Although both of the 2/1 apts are rent-ready (as in no rehab needed) the owner is living in one ( which isn't an issue becasue she'll be moving out asap) but the other one has a tenant that will have to be evicted/cash for keys. She hasn't paid rent in 2 months. No lease though. But difficult and has called the cops on the owner for made-up reasons. So that will be a fun time getting her out of the apt. With the 3/1 apt not rent ready and needing some rehab, I couldn't promise $2k/month payments because I couldn't personally subsidize that cost if it takes a while to get the bad tenant out. 

    0Reply
  • Kevin S.
    Accountant · Tulsa, OK · Member since 2018 · 312 posts · 349 votes
    7y

    @Nicholas Morgan after reading through everything my opinion is I don't think she's going to bite for the offer you can put together. You've already stated her main motivator is moving close to her grandkids and $5k cash in hand just isn't going to get her a downpayment (let alone pay cash for) a house like you said she wanted. Plus you'd be stretching yourself just to cover this and you stated that there's going to be an eviction or cash for keys to get the other tenant out. 

    0Reply
  • Tim Herman
    Member since 2018 · 2k+ posts · 1k+ votes
    7y

    @Nicholas Morgan if she would go for 100% credit that would be awesome.  what you are doing is solving her problem. Give her the guarantee one month from now. According to google you can get the tenant out in 2-3 weeks. What rehab to make the 3/1 rent ready. Another way $5000 option money and agree to put $5000 into rehab work. 

    0Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    7y
    Originally posted by @Tim Herman:

    @Nicholas Morgan if she would go for 100% credit that would be awesome.  what you are doing is solving her problem. Give her the guarantee one month from now. According to google you can get the tenant out in 2-3 weeks. What rehab to make the 3/1 rent ready. Another way $5000 option money and agree to put $5000 into rehab work. 

    or frankly just put it on MLS there are hordes of buyers for this stuff sell it for cash and move on.. that's what her agent should be advising her to do.. does not help the OP but at some point you need to consider the sellers side of this and what is best for them.

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  • Nicholas Morgan
    OP
    Cincinnati, OH · Member since 2018 · 85 posts · 29 votes
    7y
    Originally posted by @Jay Hinrichs:
    Originally posted by @Tim Herman:

    @Nicholas Morgan if she would go for 100% credit that would be awesome.  what you are doing is solving her problem. Give her the guarantee one month from now. According to google you can get the tenant out in 2-3 weeks. What rehab to make the 3/1 rent ready. Another way $5000 option money and agree to put $5000 into rehab work. 

    or frankly just put it on MLS there are hordes of buyers for this stuff sell it for cash and move on.. that's what her agent should be advising her to do.. does not help the OP but at some point you need to consider the sellers side of this and what is best for them.

    Agreed. It is on the MLS...has been for a month or so. But it just dropped to 155k a few hours after I toured it.
    I don't think it's got a lot of steam to how old it is and where it's located. It's more in the country near a state park. My wife and I want to live there because it's where we want to be (10 min from her parents and 10min from our church and it has a large creek and 3 acres of land for future kids to run around on). We plan to live in the 3/1.  Anyway the location is a little further from the main city area where most people (I feel) are looking for investment properties. 

    I think my only options moving forward are: 

    1. Private lending for the 155k purchase price. (If anyone is interested, PM me! haha......but seriously) 

    2. A purchase option similar to what Tim mentioned above (tho, this still doesn't give her an immediate influx of cash for a purchase near her family)

    I agree - the 5k in hand won't be helpful to her. Plus she doesn't have an income so she won't be able to get a loan. 

    I appreciate all the insight! 

    0Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    7y
    Originally posted by @Nicholas Morgan:
    Originally posted by @Jay Hinrichs:
    Originally posted by @Tim Herman:

    @Nicholas Morgan if she would go for 100% credit that would be awesome.  what you are doing is solving her problem. Give her the guarantee one month from now. According to google you can get the tenant out in 2-3 weeks. What rehab to make the 3/1 rent ready. Another way $5000 option money and agree to put $5000 into rehab work. 

    or frankly just put it on MLS there are hordes of buyers for this stuff sell it for cash and move on.. that's what her agent should be advising her to do.. does not help the OP but at some point you need to consider the sellers side of this and what is best for them.

    Agreed. It is on the MLS...has been for a month or so. But it just dropped to 155k a few hours after I toured it.
    I don't think it's got a lot of steam to how old it is and where it's located. It's more in the country near a state park. My wife and I want to live there because it's where we want to be (10 min from her parents and 10min from our church and it has a large creek and 3 acres of land for future kids to run around on). We plan to live in the 3/1.  Anyway the location is a little further from the main city area where most people (I feel) are looking for investment properties. 

    I think my only options moving forward are: 

    1. Private lending for the 155k purchase price. (If anyone is interested, PM me! haha......but seriously) 

    2. A purchase option similar to what Tim mentioned above (tho, this still doesn't give her an immediate influx of cash for a purchase near her family)

    I agree - the 5k in hand won't be helpful to her. Plus she doesn't have an income so she won't be able to get a loan. 

    I appreciate all the insight! 

    Ok got it.. then not super desirable to the off the street investor you have something emotionally attached to it.. I get it..  

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  • Dennis M.
    Rental Property Investor · Erie, PA · Member since 2018 · 6k+ posts · 9k+ votes
    7y

    Where is the 10k closing fees coming from . On a land contract you shouldn’t be paying anywhere near that . Is she still going to hold the note ? I would avoid an option fee to buy later . I would find a way to get her a solid 10k walking money in this . Maybe ask parents to help ? In-laws to help ? Get an unsecured line of credit at the bank ? A personal loan ? Sell an old car or borrow against a retirement plan ? Rich uncle Huey ?

    0Reply
  • Nicholas Morgan
    OP
    Cincinnati, OH · Member since 2018 · 85 posts · 29 votes
    7y

    Hey everyone, just wanted to provide an update on this triplex: 

    Seller financing is not an option. She needs the property bought outright from her due to her situation. Situation being she wants to move and has no income to qualify for a loan. She will want the large chunk of cash from this triplex sale to buy a new house in cash. 

    To be clear, yes I would like to live there. It checks all of our boxes for the type of property my wife and I want to live in for the next foreseeable future (5-10 years). However, at the end of the day it's all based on numbers. If the numbers did not make sense, we would not be pursuing the property. 

    Moving forward, it seems that we will have to pass this one up unless we are able to find a small bank that will hold the note and give me a loan. Or if I find a private lender who wants to loan the money either long term or short term until I can get a conventional loan in ~6months or so. 

    I appreciate everyone's input! 

    0Reply
  • Nicholas Morgan
    OP
    Cincinnati, OH · Member since 2018 · 85 posts · 29 votes
    7y

    Hello Everyone, 

    Please give me your input on this situation. Does this seem like a good deal to you...?

    One thing I did not mention previously is the seller is trying to sell a 3bed/2bath SFR right next to the triplex as well. She is open to combining the two properties (she mentioned this in her MLS listing). Up until a few days a go, the SFR was under contract and fell out of contract now.

    Additionally, I've spoken to a lender who may be able to provide a loan with the following arrangement. They provide 80% of the sale price, I bring to the table 5% of the sale price, and the remaining 15% is seller financed. 

    Quick recap: 

    - The triplex is owned free and clear

    - The SFR has a mortgage still due on it, the amount I'm not sure. County records show it was last bought by the seller's late husband in 1995 for $72,000.

    - SFR was originally listed at $175,900 and now after it's fell out of contract it's listed at $140,000

    - the seller wants to move out quickly to be with her grandkids after her husband passed 6 months ago, hence the low pricing

    - The seller will not do seller financing on the triplex because she wants ~$130k to purchase a house with cash near her family

    So here's what I'm thinking: 

    I offer $275k for the combined properties

    Together, the bank and I bring $233,750 to the seller

    The remaining $41,250 is financed over the next 20 years with a monthly payment of $250/month (That's 4% interest) 

    After realtor fees (total of 6%) the seller will have $217,250 cash in hand

    Assuming she spends $130k on a new house, she will have an additional $87,250 to pay off her mortgage note on the SFR

    The seller mentioned to me that when she had the SFR under contact that she was "essentially breaking even" on the sale. So I don't know what exactly that means. The last recorded sale price was the $72k in 1995, but maybe they refinanced at some point and that's not recorded? I'm not sure. So as long as her note is less than $87,250 she gets what she wants: purchase house with cash, move quickly, and $250 check in the mail for the next 20 years.

    My monthly financials would look like this: 

    Triplex Tax = $217

    SFR tax = $142

    Total insurance = $300 (this is a guesstimate. Should be very conservative. Should have an insurance quote today)

    Mortgage = $1200 (assuming a 5% interest rate. I haven't yet got numbers on this yet, but hope to hear back today)

    Seller Financed Payment = $250

    ----------------------------------------------------------------

    Sum of Expenses = -$2,108

    Triplex income = $2050 (650,650,750 = rents)

    Difference = -$58

    Move out of my current SFR and rent = between $800 - $900 (savings of $650/month by not paying mortgage and then cash flow of $150-250/month depending if I rent for $1000 or $1100 a month. Additionally, not considered is $200/month is set aside for vacancy, CapEx, and maintenance)

    If renting current residence is considered, the financial gain compared to current situation = +$742/month (or $842/month)

    ------------------------------------------------------------------

    I realize I'm not taking maintenance or vacancy into account on the Triplex property. 

    What do you think of this scenario? 

    Would you take the deal as the seller?

    Would you make this purchase if you were in my shoes? 

    What would you change? 

    Thanks so much!

    Nicholas 

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  • Theresa HarrisPro Member
    Member since 2019 · 15k+ posts · 11k+ votes
    7y

    You have ~7% down payment and are planning on living there.  What is the minimum down payment required for this type of loan in the US? I thought it was under 5%?  

    If you have to get a loan to pay for it, ask her for closing costs.  It isn't selling and she wants to move and needs money to buy her next place.  You will have to reno one unit and evict another tenant.

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  • Theresa HarrisPro Member
    Member since 2019 · 15k+ posts · 11k+ votes
    7y

    @Nicholas Morgan

    What are the numbers on the SFH alone? You mentioned the triplex is on a large lot (3 acres), is the SFH on a similar sized lot? The numbers on the triplex look good, I just don't know about the SFH.

    The seller while the seller may really want to sell to be closer to her grandkids, don't let her emotions come into play when you look at the numbers. You mentioned she said she was breaking even on the SFH which they bought 25 years ago for $72K and is now listed at $140K...something is fishy. Maybe they took out a load to buy the triplex which you said she owns free and clear. She can always rent a place near her grandkids until both of her places sell. Once they sell, she will have money in her pocket.

    1Reply
  • Tim Herman
    Member since 2018 · 2k+ posts · 1k+ votes
    7y

    @Nicholas Morgan need clarification buying a triplex and SFH. Are you moving into the SFH and renting your current residence. Have you ran the numbers for each individual property separately. This is a numbers game.

    0Reply
  • Nicholas Morgan
    OP
    Cincinnati, OH · Member since 2018 · 85 posts · 29 votes
    7y

    Thanks for all the replies. Let me see if I can clear some of this up...

    - The SFR is on 2 acres so combined I'd have 5 acres (which is great for me - this is the kind of property I would see me and my family living at for the next 10+ years)

    - I would live in SFR and rent triplex in entirety to offset all expenses

    - My current residence is a SFR I would rent as well when I moved into this new SFR

    - Triplex is listed for $155k 

    - SFR is listed now for $140k

    - I hope to purchase the properties together with a single loan product. 

    - Good call on asking for closing costs. Paying for a small reno and evicting definitely won't be ideal, but shouldn't be awful. I'm hoping to do a cash for keys with the tenant, but we'll see. 

    - The numbers for the triplex work are good by itself. I wouldn't be opposed to purchasing the Triplex on its own, but because of my low cash on hand (can't put 20% down) and the inability to get another low-money-down loan product (because I have to fulfill my 12mo at my current residence before a bank will offer that product) I'd have to have some portion seller-financed. However, she doesn't seem she'd be willing to accept an offer where she doesn't get her $130k cash to purchase a house with

    -Agreed, the $72k purchase price and now the "breaking even" discussion seems interesting. Not sure the situation there. 

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  • Nicholas Morgan
    OP
    Cincinnati, OH · Member since 2018 · 85 posts · 29 votes
    7y

    Update - Received Insurance quotes: 

    SFR - $57/month - Insured up to replacement cost

    Triplex - $143/month - Insured up to replacement cost

    Triplex - $90/month - if insured to essentially how much I pay for property ($150k) 

    -----------------------------------------

    Essentially, insurance is $100/month cheaper than originally calculated numbers with. Which means with triplex fully rented and me living in SFR, the Difference would be a ~+$40/month.

    When I include renting current residence, that brings it to +$780/month 

    0Reply
  • Michael Ealy
    Developer · Cincinnati, OH · Member since 2018 · 1k+ posts · 3k+ votes
    7y
    Originally posted by @Nicholas Morgan:

    Thanks for all the replies. Let me see if I can clear some of this up...

    - The SFR is on 2 acres so combined I'd have 5 acres (which is great for me - this is the kind of property I would see me and my family living at for the next 10+ years)

    - I would live in SFR and rent triplex in entirety to offset all expenses

    - My current residence is a SFR I would rent as well when I moved into this new SFR

    - Triplex is listed for $155k 

    - SFR is listed now for $140k

    - I hope to purchase the properties together with a single loan product. 

    - Good call on asking for closing costs. Paying for a small reno and evicting definitely won't be ideal, but shouldn't be awful. I'm hoping to do a cash for keys with the tenant, but we'll see. 

    - The numbers for the triplex work are good by itself. I wouldn't be opposed to purchasing the Triplex on its own, but because of my low cash on hand (can't put 20% down) and the inability to get another low-money-down loan product (because I have to fulfill my 12mo at my current residence before a bank will offer that product) I'd have to have some portion seller-financed. However, she doesn't seem she'd be willing to accept an offer where she doesn't get her $130k cash to purchase a house with

    -Agreed, the $72k purchase price and now the "breaking even" discussion seems interesting. Not sure the situation there. 

     Hi Nicholas, 

    I am in Cincinnati too.

    I've read through your one month "saga" now on this property and it became more and more interesting.

    Here's what I would do if I were you:

    1. Buy the SFR "subject to" (meaning, you get the deed but the loan remains in the seller's name); and then

    2. Pay $130K cash for the triplex

    How would you raise $130K? 

    • First, I am assuming the triplex' value is higher than the $130K...let's say it's $180K
    • Approach a hard money lender and get a loan of $130K against the triplex. You will need some cash out of your pocket for the points and closing costs. $130K/$180K is a 72% LTV. HMLs prefer 70% LTV or up to 90% of the cost. Either way, based on your post, it sounds like you can afford some money out of pocket.

    By doing the above, you get the SFR and the triplex, the loan on the SFR will still be in the seller's name but the seller gets the $130K cash that she wants. Then, in 6 months, you can refinance both the SFR and triplex using a conventional loan and that's when you pay your agent.

    The BIG problem with this approach though is the cost of HML because HMLs charge between 8-12% (interest only) so you will have a BIG negative cashflow I am sure. At 12% interest, that eats up the $1300 a month you can get from that 1 unit that is rent ready. The other expenses will come out of your pocket.

    The other way to raise the $130K cash is through a private lender but it sounds like you don't have that lined up.

    If you have a 720 credit score, you can also get a Business Line of Credit but, depending on your income, and debt-to-income, it will likely be a lot less than $130K. But if you get $40K out of a BLOC, you can use that for the HML.

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