90% finance, seller carry 10% - Posted by Chris

Posted by Patrick S. Lawson on March 20, 2006 at 14:53:36:

You need 5% of your own funds. Does not matter where they come from as long as you can show them in a bank account (of yours).

90% finance, seller carry 10% - Posted by Chris

Posted by Chris on March 19, 2006 at 22:09:23:

I’m currently running numbers on a 11-unit apt complex and my brokers is doing finance research for me. The seller is willing to carry back 10% so i want 90% LVT for a full 100% finance, then when i’m preaproved get creative in negotiations and try to pay as little closing costs as possible. problem is my broker says she doesnt know if she can get that financing with seller carrying back 10%. she thinks no money out of pocket on my part may be a problem. I have excellent credit, Property is fully rented, $350per unit, asking price $260,000, two blocks from a state college.

Should i have a problem with financing or is it just her lack of knowledge? please give me your advice.

Thanks-
Chris

Re: 90% finance, seller carry 10% - Posted by Walt

Posted by Walt on March 19, 2006 at 23:32:40:

Chris, there is one lender that will do 80% of the appraised value rather than the purchase price. This will effectively give you 100% if you are buying under value. They will also do 95% of purchase.

Re: 90% finance, seller carry 10% - Posted by Patrick

Posted by Patrick on March 19, 2006 at 22:54:01:

Yes the commercial lender will want to see at least 10% of your own money in the deal, and thats at least 10%

Re: 90% finance, seller carry 10% - Posted by Chris

Posted by Chris on March 20, 2006 at 24:07:27:

so the fact that the seller is willing to carry 10% wont really help me much since no matter what i have to put up some of my own money? what if it is money from a line of credit, is this considered “My own” or can it not be borrowed at all? if so can the owner simply “loan” me the money in cash and that can be my downpayment? would that work?

Re: 90% finance, seller carry 10% - Posted by Chris Freeburn

Posted by Chris Freeburn on March 20, 2006 at 18:22:43:

Update

I talked to the realtor of the eleven unit. its been on the market for almost one year (very slumlike but rents are always paid). price has been lowered once. would cash flow at asking price. $260,000 at $350/mo per unit. It sounds like it would not pass inspection. is there a way around this or can i work it to my advantage asking the seller to finance most of it? I will look at it on friday. I want to make a plan of attack but am learning as i go. I could “subject to” and have him finance a portion of the rest.

Whats you professional opinion? I can anwer any questions regarding details. thank you so much.

Re: 90% finance, seller carry 10% - Posted by zach

Posted by zach on March 20, 2006 at 04:06:07:

If you can go full doc there certainly is lenders that will give you 90% financing and allow a 5% seller on top of this. You will have to come in with 5% of your own funds. If you get the cash out from another property you can definately use that as a downpayment. If you have to go Stated then yes 10% down is necessary unless you are able to obtain a mezzanine 2nd up to 95% which are quite expensive.