A Question about DownPayments... - Posted by JamesL

Posted by JamesL on October 21, 2000 at 13:52:02:

Wow…great ideas…that’s what I’m looking for…

A Question about DownPayments… - Posted by JamesL

Posted by JamesL on October 19, 2000 at 14:05:02:

The deal I have planned looks like this so far…
There are 16 units in 9 properties I plan to buy from the seller. Two properties are 4-family, one is 2-family, and six properties are 1-family houses. The total purchase price for all of these will probably be around $510,000.
My partner and I have good credit, but no cash or
assets. Obtaining bank financing should be no problem, but we have no down payment. We only earn around $200 per week working at a restaurant.
The seller will give us whatever the bank will require as a downpayment. That way, he still gets his properties sold, and receives lots of cash from the bank.
Our problem is finding a way to transfer the downpayment money from his bank account to ours without losing the loan. The mortgage company says that the downpayment money must be “seasoned” in an account for at least 60 days before it can be used. In addition, I expect the bank to investigate us if we have $70.00 in the bank, and then deposit $50,000.00 suddenly!
With so many other things falling into place (finding the properties, finding the owner, negotiations, viewing the properties, finding a lender, etc), it does not seem right that this little problem should get in our way…
Any ideas on how to work through this??
Thanks for the reply

Re: A Question about DownPayments… - Posted by Dave T

Posted by Dave T on October 22, 2000 at 22:33:08:

Take a 180-day option on the total package of properties. Select the most marketable single family property (move-in condition, no repair required) and offer to sell it at slightly below FMV.

When your buyer gets financing approval and is ready to go to settlement, schedule a simultaneous closing with your seller. Use the proceeds from the sale of the one property to fund the downpayment on the purchase of the rest.

This is an approach suggested by Robert Allen in one of his “Nothing Down” books.

Re: A Question about DownPayments… - Posted by Dwight Munson

Posted by Dwight Munson on October 20, 2000 at 22:03:42:

Two comments one TRandle is worried about fraud a lot of fraud is about intent( a lay persons point of view) if you are concerned get an opinion. A method I heard of is have the money transfered into your account prior to the time requirement and let the seller control the account if he is worried about it. If you are asked where did the money come from you could say I sold something like a rare work of art a race car etc something untracable. Raise the cash from your credit cards get more cards. Have the owner give you one property and get a loan on it for your down payment. This is a great opportunity so many ways to satisfy the requirements.

Re: A Question about DownPayments… - Posted by Frank

Posted by Frank on October 19, 2000 at 18:03:48:

If the property is currently rented and your rental income can support the mortgages, you maybe able to get a commercial loan from a local bank at 75% of the sales price and have the seller carry a 2nd for the balance. My bank has allowed this type of deal with NO money down as long as the propery appraises at or above the sales price. GOOD LUCK

Re: A Question about DownPayments… - Posted by TRandle

Posted by TRandle on October 19, 2000 at 17:42:01:

I’m not that knowledgeable about commercial financing, but regardless, it sounds like you’re dancing with fraud here. My understanding is fairly simple - if you have to hide it from the lender, it’s wrong. Have you considered partners or other sources of funds? Maybe a PACTRUST from Gatten would work for this situation (I just know some of the basics, but you can contact Bill Gatten to find out). Perhaps if the numbers looked good enough, you can find a lender that would allow a seller second for most, if not all of the difference. Maybe you can work with the fact that you’re dealing with multiple properties (buy one and sell it for down, etc.) My 2 cents…

Re: A Question about DownPayments… - Posted by JamesL

Posted by JamesL on October 23, 2000 at 16:53:57:

Thanks Dave…I plan to incorporate that into my solution.