Investor · Oklahoma City, OK · Member since 2016 · 48 posts · 31 votes
Good afternoon, a family friend came to me with a deal on 7 properties. We haven't lined everything up but I have a question regarding financing. I'm expecting to acquire these for below market value. Any idea if a lender would be willing to accept the equity in the properties rather than requiring 20% down? I'd be talking about a commercial property.
Any other options I might have? They are all smaller single family homes. I expect values to be $70-80k each but hope to get them for $50-60k each.
I have options to tap for extra cash but would prefer not to.
Any commercial lender will want you to have some 'skin' in the game. Meaning they want you to have some of your own cash in on the deal especially on a permanent financing loan. You may be able to finagle some kind of deal with a local private lender, but in general, it will be very difficult to have $0.00 in on this deal. 20-30% down is what you should expect. You may get a higher LTV, but you're going to pay for it in higher Rates and higher closing costs. Lenders get there money one way or another, just try and keep that in mind.
Have you asked for a bit of owner financing? Here is what I would do. 1). Borrow as much from your 401K as possible in cash. Waive that in front of said family member and ask for a reasonable rate on the rest.