Mike, What is the seller willing to carry back in a note if you come up with 5% as a down payment? You might be able to contact a hard money lender in your area if not email me and I’ll recommend a hard money lender, fair enough? $131k for a 7 Units is cheap! Where is the location? Is it in a good neighborhood or appreciating area? I would ask the seller to reduce his asking price by 10% to 5% then add the reduction to pay the closing costs if any money is left you will receive it back at closing.
In my experience banks finance these kinds of deals at 80% of appraised value or 80% of purchase price which ever is less.
How to come up with the 20%? A couple options.
Have the owner carry the 20% down. Talk to your local banks and find someone who will write loans like this.(save your cash for unforseen things)
If you have another property with equity. Have the bank finance 80% against the building being purchased and a 20% second mortgage against another property with equity.
Bank loan for 80%, seller carry 10%, borrow 5% from a friend to add to your 5% to make the difference.
A lot of banks will finance 80%, seller carry 10%, owner 10%. Talk to local, regional independent banks making commercial loans and ask them what they are willing to do.
4 Partner with someone, do this only as a last resort or if the partner can provide valuable experience that you want.
Hard Money Lender, killer interest rates
We have financed three similar properties since jan. One a 5 unit, one six unit and one 13 unit. We have not put up any money on either of the units. On one the owner carried the 20% down payment. The other two we used equity in other properties.