Rental Property Investor · Albany, OR · Member since 2015 · 312 posts · 136 votes
So I've been doing a lot of reading regarding getting into buying apartment complexes and am eager to do my first commercial deal. I've heard a lot about getting into deals with little money down using creative financing. When I approached a broker about seller financing with a small down payment he basically laughed and told me that it won't happen in San Diego. My question is, are you guys seeing these kind of deals? And if so, are they in less desirable markets? How would you suggest trying to get a seller to agree to low/no money down? I know a lot of people do syndication's to fund the down payment, however with no experience I don't feel comfortable asking investors to trust me with their money. Any suggestions?
First thing Jacob, NEVER tell a broker on your first call or two that you're looking for Seller Financing. What the broker hears is, "Hi, I have no money. Do you know any Sellers that will give me their property?" Also, if they can't figure out how their commission will get paid, they will generally not be open to discussing Seller Financing on your behalf with the Seller. Yes, these deals can get done in every market, but they generally work better in non-hot markets and on smaller properties. They also work better after you've created a rapport with the Seller directly.
First thing Jacob, NEVER tell a broker on your first call or two that you're looking for Seller Financing. What the broker hears is, "Hi, I have no money. Do you know any Sellers that will give me their property?" Also, if they can't figure out how their commission will get paid, they will generally not be open to discussing Seller Financing on your behalf with the Seller. Yes, these deals can get done in every market, but they generally work better in non-hot markets and on smaller properties. They also work better after you've created a rapport with the Seller directly.
I have purchased a single family home with seller financing in San Diego but the seller wanted the typical investor property down payment (I put $40K down on a $167K purchase). I did get a reduction of interest rate over traditional finance, reduced closing costs (no appraisal, etc.) and a much easier close process (minimal documentation was required).
I think you will need to work hard to find a seller willing to finance with a small or no down payment in San Diego.
I know deals in the LA market that get done with seller financing. It's hard to come by and they are generally off market deals for properties with a lot of deferred maintenance, so you'll need to have good brokers who have access and cash to renovate. That said, no money down is probably impossible, I wouldn't count on finding a deal like that, particularly in apartments when buying activity is high. You might be able to find a deal with seller financing, but you'll definitely need to have cash one way or another.
@Jake ThompsonYou will want to find someone who wants to retire and collect a check every month without the rigors of landlording any longer. As has been stated, it will likely be an off market deal - not through an agent. Study up on the benefits for a seller to carry the contract (spread out his tax hit, monthly income, better interest than a bank cd, etc). Then go to Reia meetings and talk to everyone! It CAN happen ... but it will take work! Good luck.