Lender · Chicago, IL · Member since 2018 · 8 posts · 6 votes
I need help on the lending side for this potential deal...
I am negotiating a purchase agreement with a seller carryback of 20-30% as a second-lien position. Approximate purchase price of $650-$850k with a construction budget of $1.0-$1.5m depending on total unit count. Total cost including acquisition price of $2.35m.
I believe we will be able to create a total of 20-30 units in this building. It is a 24,000sf structure with the ability to add an additional 6,000sf of interior space through a currently unused portion of the building. Total square footage could work out to about 30,000 when all is said and done.
If I am able to negotiate a contract with the seller to carryback the 20-30%, what kind of financing options would we have. I would like to have zero dollars out of pocket except for soft costs. Is this possible? If so, with who?
Lender · Los Angeles, CA · Member since 2022 · 967 posts · 445 votes
2y
Hi Bryan,
It's very rare that you would be able to put down 0% on these deals as lenders like to see that you have some skin in the game (worth giving a try though). I do know of 0% down programs but only limited to 1-4 units. There's programs that allow seller carry backs (for example up to 90% CLTV).
It's very rare that you would be able to put down 0% on these deals as lenders like to see that you have some skin in the game (worth giving a try though). I do know of 0% down programs but only limited to 1-4 units. There's programs that allow seller carry backs (for example up to 90% CLTV).
Let me know when you can talk - I have some questions.
Attorney · Philadelphia · Member since 2018 · 2k+ posts · 3k+ votes
2y
@Bryan Schmidt It sounds like you will need a construction loan to fund the improvements even if the seller were to offer you a second position mortgage for 20-30% of the purchase price. I don't believe this fact pattern lends itself to a 2nd position seller finance lien because of the construction debt that would be in 1st position. Different story if a construction loan facility was not required.