Flexible Lenders in Virginia - Trying to get my next couple deals

[Michael Strobel]

Hey BP Fam!

I am a current small multifamily buy and hold investor and real estate agent in Central Virginia and I have been running a small direct mail campaign to help me find off-market deals. I own 2 properties (6 units) that I currently own that I have gotten into with zero down over the last few years.

My direct mail campaign has provided me a pretty solid lead with a gentleman in his late 80’s that is looking to sell his portfolio over the next year or so. He owns 3 duplexes and 1 fourplex. We have spoken on the phone once already and he let me know that he is in poor health and is looking to liquidate his properties. He is currently only looking to sell 2 of his duplexes right now because they are both completely vacant. He has been self-managing his properties for nearly 50 years and he’s just not interested in putting them into property management. The owner told me he’s just too old to go show the property/make any repairs so both properties have been sitting vacant for a while. He is asking $138k for each duplex. Not an outrageous ask but they are probably worth $145-$150k fully rented and upgraded. They aren’t in bad condition but could use about 10k each in upgrades to bring them up to where they need to be to command top rents.

I believe I can negotiate down to about $117k-125k each (hopefully less). My dilemma is getting financing for these properties. If I was able to negotiate these down to $125k each, a bank would require the down payment of 25% or $31,250 since its an investment property and not a personal residence. ($62,500 for both properties) I just don't have that cash right now. I have some cashflow savings from my other properties and personal savings but not anywhere close to those numbers. What I want to try and do is find a bank that will allow for them to hold 75% LTV and the seller hold a note (in 2nd position) for the other 25%. Then I can use my cashflow and savings for closing costs/repairs.

Has anyone worked with any lenders in Virginia (or nationally) that will allow for this? I’ve heard it done on the BP podcast and other books I’ve read. I’ve called/reached out to nearly a dozen banks with little success. I've built some relationships with some local banks but not really getting any traction with them. 

Open to other ideas as well such as reasonable private money to fund. I set a goal for the beginning of the year to go from 6 to 12 units by Dec 31. This lead could get me there but financing is my only obstacle. I would love any advice you may have BP.

Thanks!