Commercial Loan with Seller Carryback - What kind of terms today?

[Leo B.]

Hi All-

I'm looking into purchasing a mid-sized apartment and in the middle of researching financing for these types of deals. Ideally, I would like to leverage my down payment as much as possible. Hence, I will be considering seller carrybacks whenever possible. For those who have purchased apartments with seller carryback, what types of loan terms were you offered? Also, what are the requirements for the borrower? I have an LLC that I would like to title the property to.

• Amortization term (ie. 30 year, 25 year, etc)?
• Balloon term?
• Interest rate?
• Origination fee?
• Min. credit score?
• Reserve amount?
• Down payment?
• Assets?
• DSCR?

My basic apartment parameters are below:

• Mid-sized apartment complex (30 to 60 units)
• Performing building
• Looking for minor value adds
• Purchase price up to $1.5M
• Midwest (IN, OH, MO)

Thanks in advance for the replies.

[Todd Dexheimer]

Not many lenders will allow this and if they say that they will, make sure that you get clarity on what that means. Every lender I have talked to about this that will allow it, will actually reduce your LTV so that the total loan amount between the 1st and 2nd still hit DSCR and 20-25% down payment.

A viable option is to have the seller leave money into the deal as an investor. You then give them an equity split of the partnership on the limited side. You can make this a 5% preferred return or whatever you wish.