Seller Financing on Multi-Units

[Nick Patterson]

The main reason for seller financing on multi-units is to bring the less than 20% to the table.

However, the problem is when refinancing in 1-2 years time banks will look at the original contract and value the property at that amount. So in reality its just delaying the downpayment.

Has anybody here had any luck with seller financing multi-units with bringing little to the closing table and being able to refi? What strategies work?

[Chris Winterhalter]

@Nick Patterson

I think there are a variety of reasons why seller financing can be attractive for a buyer including bringing less than 20% to the table at closing. Many banks will have different policies on this however most have a 6 month - 1 year seasoning period where they will only fund up to a certain amount of LTC (loan to cost). The bank might still look back to your original purchase price and want to know what you have done to increase the value. If your purchase was a value play or reposition type deal then you should be able to justify the increase in value. However after a certain period of time the bank will just use an appraisal to justify the value. In my experience if a bank doesn't want to do a deal they will come up with pricing or terms that do everything but hand you a denial letter.