Is this legal? 4.3 Million dollar deal ...

[Johnny Quilenderino]

Good afternoon BP

I have been offered a 4.3 million dollar deal. The seller knows I do not have a down payment. He offered to lower the price to see if I would take a 20 percent down payment and owner financing. I looked at the financials and NOI is 54k a month and cap rate is 5 percent on a 4.3 million dollar investment.

The Rub:

Currently I do not have the down payment, next year or the following, absolutely.

Possible fixes:

1) See if a commercial lender will finance a down payment, while I pay the owner for the next ten years or until a can save enough for a proper downpayment, all the while paying the down payment too. 

2) Find a rich uncle, who is not afraid of the numbers.

3) Find partners.

Legality: Is it legal to ask for a lender to fund the downpayment?

Thank you.

Johnny

[Cody L.]

Legal? Absolutely. Why wouldn't it be?

But if it's bought via seller finance, seller will have first lien to protect the ~80% he financed. Which means the lender doing the 20% down payment will have a second, with no equity, and a borrower with no skin in the game (which means a giant risk for them).

I've given people I know who trust me personal guarantees and got loans for 1/2 my downpayment (they know I'm good for it as I can cover the debt on a global cash flow level). Those terms for me have been 8-12%.

You might be able to find a private/HML, depending on your bio, to fund part of that downpayment but not all and not cheaply.