Hard money lenders for 20% down payment for Freddie Mac Loan

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Hard money lenders for 20% down payment for Freddie Mac Loan

Fayez Shantanu
Austin, TX · Member since 2018 · 7 posts · 1 vote

Hi BP folks,

Lets say I like to make a deal on MF unit that have cap rate of 8% and If qualified for Freddie Mac loan that will let me have 75% LTV but then can I have the remaining 25% from hard money lender (but non-recourse if possible ? )


Any suggestion would be beneficial... and yes I m a newbie in MF but do have few SFH that are generating cash flow

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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
8y

OK let me see you want 100% financing with no personal guarantee..   try it if it works other wise walk.. who makes those loans.. that was another time and in another place.. someone would have to be a complete idiot to do that for you.  @Chris Seveney  chris is suggesting a money partner and mostly these are done through syndications were your the sponsor but most investor want to know the sponsor has some skin in the game and is going to be there at the end or if the going gets tough.

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  • Chris SeveneyBusiness Member
    Moderator
    Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
    8y
    Fayez Shantanu Most lenders do not allow you to borrow the balance even if it is in 2nd position. If you don’t have the $ then bring someone in that does and give them an equity stake in the business. If they put in 25% they will probably want more than that, or you can give them a pref. With hurdles for additional returns
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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    8y

    OK let me see you want 100% financing with no personal guarantee..   try it if it works other wise walk.. who makes those loans.. that was another time and in another place.. someone would have to be a complete idiot to do that for you.  @Chris Seveney  chris is suggesting a money partner and mostly these are done through syndications were your the sponsor but most investor want to know the sponsor has some skin in the game and is going to be there at the end or if the going gets tough.

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  • Fayez Shantanu
    OP
    Austin, TX · Member since 2018 · 7 posts · 1 vote
    8y

    Thanks Chris and Jay for ur response...really appreciate ur feedback ..

    Which firms does legitimate syndication and how do I go about handling the PPM for the investors ? Also if I get another investor to have an equity share of the MF investment how do I initiate the PPM ?

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  • Fayez Shantanu
    OP
    Austin, TX · Member since 2018 · 7 posts · 1 vote
    8y
    Originally posted by @Chris Seveney:

    Fayez Shantanu
    Most lenders do not allow you to borrow the balance even if it is in 2nd position. If you don’t have the $ then bring someone in that does and give them an equity stake in the business. If they put in 25% they will probably want more than that, or you can give them a pref. With hurdles for additional returns

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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    8y

    I think Dave lindahl and Cordone and sumrock I think all those guys are basically based in Texas you should pay for one of their courses.  your not going to get the detail you need on BP and talking to us in the peanut gallery about doing syndications atleast you should not listen to us.. LOL.. those are legal docs that need to be done correctly and some of those guys have nice groups all put together with a cadre of investors ready to rock and roll.

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  • Paul B.
    Rental Property Investor · Dallas, TX · Member since 2015 · 501 posts · 504 votes
    8y

    I agree with Jay....find someone who has done this before. You need an attorney who specializes in syndications to set it up in an SEC-compliant manner. Note that you may need a different attorney for the remainder of the transaction, since they have different specialties. 

    Is this an actual deal or a hypothetical? An 8-cap in Texas? If it's in a decent submarket and is Class C or above, it should be easy to find a partner if you look in the right place. You're supposed to have a team in place before you find a deal, instead of scrambling after you find one.

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  • Chris SeveneyBusiness Member
    Moderator
    Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
    8y

    @Fayez Shantanu

    I know Jillian Sidoti is an attorney who specializes in PPM and syndication. Please be advised it is not cheap. I have heard if the deal is less than $2M its not worth the cost.

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  • Fayez Shantanu
    OP
    Austin, TX · Member since 2018 · 7 posts · 1 vote
    8y

    If I decide to do this with another partner (friend of mine) but no syndications is there a need to have the PPM and be compliant to SEC rules.? I don't want to build a team of investors yet but just myself and friend of mine decide to be active investors is there a need to have an attorney close the deal? or is a commercial broker good enough to close the deal?

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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    8y
    Originally posted by @Fayez Shantanu:

    If I decide to do this with another partner (friend of mine) but no syndications is there a need to have the PPM and be compliant to SEC rules.? I don't want to build a team of investors yet but just myself and friend of mine decide to be active investors is there a need to have an attorney close the deal? or is a commercial broker good enough to close the deal?

    nope just do a simple LLC agreement with both of you as managing members or you manage him member and spell out the business arrangement in the operating agreement that is simple no need for PPM if its just you and one investor you know.

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  • Ivan BarrattBusiness Member
    Investor · Indianapolis, IN · Member since 2015 · 764 posts · 953 votes
    8y

    @Jay Hinrichs mentions how I set up my first bigger deal (now small). I found one partner (I already had the relationship... always be raising!). He put up all of the hard cash (I threw in acquisition fee / commission back into the deal). He got an 7 pref and 50/50 split thereafter.

    *Remember to underwrite a management fee and payroll! I underestimated the payroll first time out. It was a tough lesson to learn.

    All the best!

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  • Ronald RohdePro Member
    Attorney · Dallas, TX · Member since 2016 · 5k+ posts · 2k+ votes
    8y
    Originally posted by @Chris Seveney:

    @Fayez Shantanu

    I know Jillian Sidoti is an attorney who specializes in PPM and syndication. Please be advised it is not cheap. I have heard if the deal is less than $2M its not worth the cost.

     That's a pretty good ballpark project cost. OP isn't going to go from no money down, to $300k of equity in this thread though.

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