Investor · Niagara Falls, NY · Member since 2016 · 9 posts · 1 vote
Hello BP,
Getting close to buying a 2 property deal with 11 units. The numbers work for me, I have financing lined up and the seller and I are pretty close (10k away was his last counter from mine). My question is I really do not want to put up all the cash for the full 20% plus all the other closing costs for the commercial loan. I am wondering what you other investors have done to limit your cash outlay at closing by potential getting the seller to help with some of these costs or other strategies used. I really want to hold as much cash to help finance other deals I am working on. Thanks in advance for any insight!
Honestly if you are a new investor I would be surprised if they don't ask for 25% down (the bank). They want to make sure you have enough "skin in the game" as they are taking the bigger risk loaning you all that money! Sometimes banks have rules as to the seller not being allowed to offer to pay closing costs or similar!
@Josh Quant you can ask the seller to carry a second note for 5-15% this way your down payment would be as low as 5%
You can also ask for the seller to pay for the survey/environmental/appraisal.
One more place where you can gain is the closing date. By setting a closing date correctly you can get the month's rents as a cash injection shortly after closing.
Same thing with the taxes, we are nearing the end of the year, you can manipulate the closing date to your benefit. Taxes will usually be pro-rated but there is no law that say it has to be equally pro-rated. You could ask the seller to fully pay this year's taxes.
Thanks Joseph for the great advice. I appreciate it, I will use definitely be using some of those tactics. One bank I met basically told me to do what I could with concessions and they would help me because of a decent track record with all my other properties. I like the setting of the closing date to max what you get in rents at closing - great tip. Thanks!