Funding Possible?????

[Hardy Rochelle]

I am looking to buy a small hotel or motel franchised that's a bank owned property? I am a new investor and this will be my first property. I don't have good credit I want to know if I can get funding for the project I have seen commercial lenders and investment groups that advertise that credit not a issue that are not hard money lenders. The hotel is 3.5 mil with a positive cash flow.

[Jon Holdman]

I suspect even having $500K is not enough to take down a deal like this. I had a term sheet from a lender last week that listed "50-80%" as their max LTVs. I suspect that a minimum of 20% down is going to be required by most lenders, and realistically more than that if either the borrower or the deal aren't just perfect.

Maybe you can get the owner to carry a second. But that might get you down to a 10% down payment, and will get you a much higher interest rate to boot. No lender is going to allow a CLTV much higher than 90% and even that's going to be a needle in a haystack to find.

The best source of financing would be the seller. Even if the seller accepts a note for 100% of the purchase price, you'll still need a big wad of cash for your due diligence and your operating capital.