Using Private $ for Down Payment with Conventional Financing

[Brian Padgett]

I'm working with an investor who's holding an unlisted 6-plex with great cash flow. I can pick it up for roughly 75-80% LTV. My challenge is that all of my capital is tied up in other deals/reserves, leaving me with little to to put down using conventional financing. I've looked at using private $ for the 25% down payment but that leaves them in 2nd position which most smart investors won't do. Hard $ doesn't seem to be an option either as nobody wants to loan the full amount. The investor holding the property can't do seller financing or a carry back on a 2nd because he needs to re-allocate the funds to another project, thus the reason he is selling.

I'm looking for any creative ideas that anyone can throw my way? I hate to lose this deal over funding/financing. I would prefer to do the whole deal using private or hard money because it frees up cash that I don't have to keep in reserves to qualify for conventional financing but I'm open to ANY ideas anyone has.

Thanks!!
Brian

[Tim Delp]

Not sure if you mean to say you can pick it up for 75 to 80% of value rather than loan to value and that is why you are interested in putting the deal together. Anyway one issue I would potentially see with you borrowing the money is as you mentioned that the first mortgage holder is typically not going to allow for a 2nd mortgage putting the Loan to Value at 100% of the purchase price. Even if there is equity in the property based upon an appraisal most lenders are going to go off the purchase price or appraised value, whichever is less for determining their loan to value. If you choose to take a private loan without collateral most lenders typically don't allow you to borrow money unsecured for your downpayment.

If the deal is that good from a cash flow or equity stand point I think finding a partner that has the credit and down payment available and either both of you going on the loan or just your partner going on the loan but both of you going on title.