do commercial lenders require 20% down all the time? how flexible are they? what if you personally have 10%, can you have the seller carry back the remaining 10% until you can refinance the entire loan?

im trying to think of different financing strategies. any feedback is appreciated.

yes, you can.

Alvin there are some lenders that allow for an 80/10 with a seller held 2nd. Main issue is going to be the loan amount and property type. Are you finding sellers that are willing to carry 2nds, and if so is the loan a bailout of a failing business?

im just brainstorming my ideas on how to approach sellers who are willing to carry a 2nd. im trying to utilize other financing strategies before using my own resources to acquire properties. id like to have 5-10 options for negotiating purposes.

Alvin, I am by no means an expert at commercial lending, but I have made it a point to learn as much as possible this year. My long term goal is to transition out of Residential and strictly into commercial lending. I have contacted several wholesale lenders and am brainstorming also to gain as much knowledge as possible. I will try to find some specific guidelines that might help you out. Are you looking at Multifamily/apartment properties or other types of properties?

great!
currently im looking for multifamily/apartments at the moment. later on ill be looking for retail properties to triple net lease and land development. for the month of april, im studying to be well versed in understanding commercial guidelines and analyzing deals.

I think I'm going to follow you around Alvin. You are as into this as I would like to be.

When You say "willing to carry a 2nd", are you talking about a second loan? such as a down payment loan?

right lets say theres a $100k property
a lender will loan up to 80% LTV which is $80k
the other 20% or $20k either has to come from me to show that im vested and liable for risk or i can ask a seller for a 20% carryback for the downpayment. this varies from different lenders but its a matter of finding one that will do 100% CLTV.

this also depends whether the property will cash flow accordingly. 20% is the required downpayment for commercial loans(5+ units).

if the seller wont carry the 20%, find a partner or two that will add it up to 20% and give them a percentage or an equity share. if you have 10% personally, save it for another property or use it as your last resort if you cant find partners.

yes this would be a second loan/note that you must make payments to the owner. the owner is now a bank. your goal is to get the owner out of the picture by refinancing the property sometime in the future.

another way to acquire the property 100% is to take the property subject to the existing mortgage. meaning the owner would place you on title and you are obligated to take over all payments, taxes, insurance, property management, maintenance, repairs, etc. if you have proper due diligence to minimize the expenses and maximize the cashflow, refinance the property with a new appraisal and cash out.

I have never heard of a commercial lender that will allow 100% CLTV. I have one down in San Diego that will allow for 95% but only if it CASH FLOWS at that LTV which is not going to happen in this state.

sorry its 95% CLTV. ive seen other investors talk about 100% CLTV. let me verify this and ill post my findings. thanks aaron

80% lender
15% seller carry
5% buyer downpayment

what about this? what if the seller has a business entity(LLC) owning the commercial property, and i offer to buy into the company and do a refinance to buy my new partner out.

Can you send me details of that lender. Theres a building in my town priced at about $4m, with very good cash flow and very low vacancy. At 5% down i could get in with just me and my business partner.

My email addy is info@premierlocation.com

anyone?

The lender only accepts packages from approved brokers. I'll be happy to get it done for you though.

That translates to If I tell you I would not get paid!

hello , I have closed many commercial loans in my 10 years. There are so many programs and yes 20% down is common. However we are able to massage it so 10% can be done. Heck I have done 5% down. and churches with very little down. Let me know if I can help.


www.carteretmortgage.com/mmoo

There are a couple of option for high LTV/CLTV commercial deals:

1. 90% LTV
2. 75% LTV 95% CLTV (20% seller second on subject property)
3. 80% LTV 100% CLTV (20% seller second on property other than subject.)

I have the ability to do 90% ltv financing on a commercial property up to 1.5 million. The program allows for personal full doc funds to be added in, to offset a property that doesnt generate income to qualify for a traditional commercial loan. It is not hard money.

www.donlajolla.com