Seller carry back lender

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Seller carry back lender

Amritpreet Singh
Member since 2020 · 12 posts · 2 votes

Looking for lenders who can do this structure:

  • 75–80% LTV in first position
  • Seller carries the remaining 20–25% as a second
  • Seller second can have a balloon (36–60 months)
  • Property price range: $80K–$140K
  • Rental property (Section 8)
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Erik EstradaBusiness Member
Lender · Member since 2022 · 6k+ posts · 1k+ votes
10mo
Quote from @Amritpreet Singh:

@Erik Estrada 25-30k would be financed by the seller right for the down payment and closing cost? And if I bring in a JV partner how would I be able to structure the deal? If I can do 75% LTV, and have the seller finance the rest, being $0 out of pocket. What would I need a JV partner for? Please let me know. Thanks


If you have a JV agreement you don't need to structure any seller carry back. Your partner will contribute the funds for closing with $0 out of pocket for you.

What's the point of the seller carry back? You still need to repay it in 3-5 years once it balloons? Unless the property is priced WAY under market value, or needs rehab, I don't see how you would exit from that loan? 

[email protected]818-269-7983
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  • Jason WrayPro Member
    Banker · Nationwide · Member since 2020 · 2k+ posts · 1k+ votes
    10mo

    There are some DSCR options but you would be capped at 85% CLTV and the loan amount needs to be above $150K. There are investment purchase programs that only require 10% Down for single family, condo or townhomes.

    You could also buy a second home out of state that only requires 5% Down.

    [email protected]727-637-4289
    0Reply
  • Erik EstradaBusiness Member
    Lender · Member since 2022 · 6k+ posts · 1k+ votes
    10mo
    Quote from @Amritpreet Singh:

    Looking for lenders who can do this structure:

    • 75–80% LTV in first position
    • Seller carries the remaining 20–25% as a second
    • Seller second can have a balloon (36–60 months)
    • Property price range: $80K–$140K
    • Rental property (Section 8)

     Hey Amritpreet, 

    Have you considered getting a JV partner instead? I think this will be a better option to secure regular DSCR financing. Most lenders will condition for the JV Agreement and might source the deposit via your partner's bank statement. If the seller is willing to carry, you might even want to structure for the seller to pay closing costs.. Some lenders will allow up to 6% on a DSCR loan.

    $28-$35k is not a hard ask to pitch to investors. If the deal makes sense... 

    [email protected]818-269-7983
    LuxePrivate Investments LLC 572 Reviews
    WebsiteView Page
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    • Amritpreet Singh
      OP
      Member since 2020 · 12 posts · 2 votes
      10mo

      @Erik Estrada 25-30k would be financed by the seller right for the down payment and closing cost? And if I bring in a JV partner how would I be able to structure the deal? If I can do 75% LTV, and have the seller finance the rest, being $0 out of pocket. What would I need a JV partner for? Please let me know. Thanks

      0Reply
    • Erik EstradaBusiness Member
      Lender · Member since 2022 · 6k+ posts · 1k+ votes
      10mo
      Quote from @Amritpreet Singh:

      @Erik Estrada 25-30k would be financed by the seller right for the down payment and closing cost? And if I bring in a JV partner how would I be able to structure the deal? If I can do 75% LTV, and have the seller finance the rest, being $0 out of pocket. What would I need a JV partner for? Please let me know. Thanks


      If you have a JV agreement you don't need to structure any seller carry back. Your partner will contribute the funds for closing with $0 out of pocket for you.

      What's the point of the seller carry back? You still need to repay it in 3-5 years once it balloons? Unless the property is priced WAY under market value, or needs rehab, I don't see how you would exit from that loan? 

      [email protected]818-269-7983
      LuxePrivate Investments LLC 572 Reviews
      WebsiteView Page
      1Reply
    • Chris SeveneyBusiness Member
      Moderator
      Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
      10mo
      Quote from @Erik Estrada:
      Quote from @Amritpreet Singh:

      @Erik Estrada 25-30k would be financed by the seller right for the down payment and closing cost? And if I bring in a JV partner how would I be able to structure the deal? If I can do 75% LTV, and have the seller finance the rest, being $0 out of pocket. What would I need a JV partner for? Please let me know. Thanks


      If you have a JV agreement you don't need to structure any seller carry back. Your partner will contribute the funds for closing with $0 out of pocket for you.

      What's the point of the seller carry back? You still need to repay it in 3-5 years once it balloons? Unless the property is priced WAY under market value, or needs rehab, I don't see how you would exit from that loan? 

      ^^^^^^ This right here ^^^^^^^^^^^^^
      I see so many people seeking 100% financing or close to it with short term balloons and be like "i can refinance in 3 years". They are banking on appreciation to refinance which they will never get the 15-25%+ equity over that period of time. Knowing your exit strategy and hvaing it be realistic is important to understand. 

      Also people doing this type of lending also go into these deals like "ok they will refinance", but in many instances again - does not happen and they wonder why it goes non perofrming.
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  • Nate HerndonPro Member
    Lender · Springfield, MO · Member since 2023 · 277 posts · 195 votes
    10mo
    Quote from @Amritpreet Singh:

    Looking for lenders who can do this structure:

    • 75–80% LTV in first position
    • Seller carries the remaining 20–25% as a second
    • Seller second can have a balloon (36–60 months)
    • Property price range: $80K–$140K
    • Rental property (Section 8)

    100% financing is a hard pass on the institutional private lending side for long-term financing (30-year fixed DSCR) - the lenders will always want to see 'skin in the game' from the investor. I utilize a program for investor clients from time-to-time that allows for the following:

    • 90% combined LTV (CLTV)

    • Lender finances up to 75% LTV

    • Seller-carry permitted that covers up to a combined 90% (lender + seller = 90%)

    • Any combination of seller/lender financing allowed, as long as we are hitting lender requirements for minimum loan amount

    • Minimum down payment of 10%

    Feel free to reach out if interested in exploring that. They will also bundle properties together for a blanket loan on your sub-$100k purchases.

    [email protected]417-605-2196
    0Reply
    • Amritpreet Singh
      OP
      Member since 2020 · 12 posts · 2 votes
      10mo

      @Nate Herndon so no lender would allow me to be $0 out of pocket? What if instead of 10% I put say $2-5k. Something in. Would that work out? 

      0Reply
    • Nate HerndonPro Member
      Lender · Springfield, MO · Member since 2023 · 277 posts · 195 votes
      10mo
      Quote from @Amritpreet Singh:

      @Nate Herndon so no lender would allow me to be $0 out of pocket? What if instead of 10% I put say $2-5k. Something in. Would that work out? 


      Unfortunately not - the most common structure that you will see for all asset-based/business-purpose lending (i.e. DSCR loans) is 80% financing max + 20% down payment from the buyer. The 90% CLTV program is quite unique in that regard.

      [email protected]417-605-2196
      0Reply
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