Is there a way around downpayment?

[Mary Jay]

Hi guys,

Is there any way around downpayment for multifamily? (more than 4 units) 

20-25% downpayment is a lot of money and I am struggling to save it

[Curtis Bidwell]

@Rodney Sums Things do get different when you deal with commercial financing. Also they already knew where the funds had come from so seasoning was not an issue.  The issue is making sure the funds are legitimately sourced and not just a cup-and-ball trick moving money around to look like you have some.  

@Ryan McGlasson Actually, I used the line of credit for both the down payment and the rehab!  So yes, this was a true 'no money down' deal.  **HOWEVER**:  I did this knowing full well the value before I entered. So, while I didn't have cash in the deal I knew there was already value (as evidenced by the refi in 10 months for double the value). I wasn't "leveraged" beyond what was 'safe'.  The reason is 2-fold: 

1.  RENTS were WAY below market.  A 2-bedroom was renting for $525.  2 days after I took possession I filled the one empty unit for $895 without doing any upgrades or even paint in the unit.  That alone proved significant upside value (approximately $400,000 increase based on income!)

2.  The property CONDITION was D-.  It didn't take much creativity to improve the interior and exterior to make it attractive.   

I went into this deal knowing it was worth $800k.  The refi appraisal came in at $750k (a bit low, but typical of a refi).  Today rents are pushing $950 and value is in excess of $1m.  So while I bought it with 100% Loan to Purchase, I knew I really had about 50% Loan-To-actual-Value. 

People want to buy with 0-down because they don't have any $.  But buying with 0-Down is not a 'magic pill' to make you rich.  It can be extremely dangerous if you don't have adequate cash flow, significant reserves, and upside value from the start.  

Happy Investing!