I am interested in purchasing a commercial property with no money down. The seller is motivated and willing to do a carry-back mortgage. How can I approach this deal? Are there lenders that are open to this type of creative strategy? Also, the seller is willing to lower the price to make deal work.

Any advice,

rroach1

I don't think there's anything creative about it.

The Seller will simply become the Lender.

Unless the Property is already encumbered with a Mortgage to a real 3rd Party Lender.

Doubt you'll find an originator that will approve a seller carry with 100% CLTV. They will want you to have some 'skin in the game.'

If you are trying to do a 100% seller carry, you'll probably need to assume (or take subject to) any existing senior debt already on the property.

Regarding lowering the SP to make the deal work, it's my understanding that lenders calculate the LTV/CLTV on the LESSOR of the contract sales price or appraised value. Therefore if the contract sales price is $800,000 and the appraised value is $1 million, the lender will base their down payment requirement on the $800k, not the $1m.

most commercial lenders will want at least 15% cash in the deal, especially in this market.
ANother way to get it done is to use hard money. THey're much more expensive, and will go to 50-60% of the value/purchase price in a loan amount, but they rarely care about seller subordinated seconds.
that might be a decent way to go if the property will cash flow after the hard money loan and the seller is willing to carry the balance for a while.

Good luck,

Craig Grella
Connect Realty
craiggrella@connectrealty.com
206-274-8336