Acquiring a multifamily bldg. "Assignment of Rents" Agreement

2 Replies

Hi BP community! I am curious if anybody out there is familiar with securing a down payment via crafting up an "assignment of rents" agreement. Essentially it is to use the income stream from the property itself as a source of collateral. Basically the lender would be given the right to impound rent to pay the loan in the event of default. 

 The seller has Ok'd such but do you think the bank will?  Sounds like the seller in general is willing to get creative. 

Any and all inquiries are truly, and greatly appreciated! 

Thanks y'all!

Moe

@Mohamed Badreddine   It is standard for commercial loans and most landlord loans to be backed by some kind of "assignment of rents".

Are you talking about a bank doing part of the financing and the seller doing another part of the financing?

In that case you should expect the bank to want a priority assignment of the rents.  The seller who would be holding a 2nd mortgage might also want an assignment of the rents.

The more tenants and the more money you are talking about the more likely these will be required.

@Mohamed Badreddine

When we close, we try to close in the beginning of the month to pro rate the rents.  You could receive a credit off the price, use it for part of the down payment, or ask for that money to be credited to you at closing. We use this money to fund our operating account.

Good Luck

Gino

Join the Largest Real Estate Investing Community

Basic membership is free, forever.