Calling a broker

Starting Out
13yFollow

Calling a broker

Leslie L.
OH · Member since 2013 · 15 posts · 0 votes

Hi everyone,

I have a question for you guys that I would love some help and insight on.

I really want to do my first deal and I know I'm to the point where I need to take what I have learned and start taking action. I really want to purchase a smaller multifamily property (4-12 units) and I have a question as to if I could call and ask a broker this.

A sticking point for me is that I don't have enough cash right now on my own for a downpayment. What I would ultimately love to setup would be a seller carry back deal where I put the money I do have as my down payment, get the rest from the seller as a second, and finance the majority of it through a tradition institution.

As a new investor who has never called a broker, would it be appropriate or reasonable for me to call one stating my above intentions? I'm just asking because I don't know if a broker would blow me off since I don't already have money lined up or if it was something that they would not want to deal with.

I just don't want to make a fool of myself calling a broker saying I don't have much of my own money but that I'm looking for seller assistance in order to close a deal if they will think that is crazy.

Anyone have any advice or insight into this?

0Reply
14 views

3 Replies

Jump to latestLatest
  • Derrick Moore
    Lender · New York City, NY · Member since 2013 · 67 posts · 7 votes
    13y

    No you should contact the broker and tell him.
    You would be wasting his time and with the new information he can just ask around. We came across a deal where the seller is selling something at 17mm and holding 4mm because they want to sell the property quickly.
    Remember: Its just business and nothing personal.

    0Reply
  • Leslie L.
    OP
    OH · Member since 2013 · 15 posts · 0 votes
    13y

    Thanks for the reply.

    So you are saying just go for it and call one?

    I guess the only thing I was worried about was coming across as a tire kicker or somebody who was just going to waste their time.

    0Reply
  • Joel OwensBusiness Member
    Moderator
    Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
    13y

    4MM is almost a 24% second note. I do not know any sellers holding that large of a note. I also do not know any lenders who allow a note that large unless the buyer is putting 10 to 15% down and then you are at a value of 60% LTV.

    Usually with resale costs 25% second added on would take most of the sellers equity out.

    Leslie,

    First do not lump 4 (a quad) into the same category as 5-12 units. Different properties and finance and structure terms.

    Secondly even if you got a seller to give a second with no money down you still have for 5 - 12 units about 8k to 10k in closing costs with phase 1, cost reserve stable, appraisal, site inspection, survey, etc.

    Lenders typically want 75% LTV which even if a seller holds a 15% second you still have 10% needed. Example say a 10 units is 300,000. You still need about 40k to 50k with the seller held second to buy this property. You also need to show the lender reserves and your track record.

    It sounds like you do not have any. I have many buyers who have hundreds of thousands to over millions in cash and own other businesses and other properties and are ready to purchase multifamily. They still use leverage as it preserves their cash and ask the seller to hold back a second. The difference is they have other properties they can put up for collateral, reserves they can show, etc.

    If I give you as a seller a nice performing property and you have no experience the odds of success are very low and I can kiss that 15% note goodbye. I would be better off lowering the price and be done with it. You will find many owner finance deals are dogs of properties the seller is trying to unload at inflated pricing.

    You need to partner up with someone that has experience. Like it or not you would be considered a tire kicker because you do not have the funds or the experience to buy this type of property.

    Podcast Guest on Show #47
    NNN Invest53 Reviews
    WebsiteView Page
    0Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free