Financing a Multifamily Property with Fannie Mae

[Doug Karkow]

My business partners and I are trying to purchase a 63-unit deal (spread across 6 buildings) near Cedar Rapids, IA with a Fannie Mae loan product. We're after their low interest, 75%-80% LTV, 30-year fixed rates, and non-recourse terms.

From what I can tell, this property meets Fannie's eligibility requirements: ~$2 million purchase and 93% occupancy, and we pass the net worth and liquidity requirements. In order to arrive at the seller's desired purchase price, we negotiated contract terms that included $200k in seller-financing so that we could still hit our cash flow and ROI targets. Lo and behold, we've been told that Fannie Mae does not allow seller-financing, so we're back to the negotiating table unless one of you can correct some flawed assumptions! Here are my questions that I'm hoping the BP community can help us with!

1. Is this true - is seller-financing not allowed with Fannie Mae multifamily loans?

2. Are there any other low interest, long amortization, non-recourse loans out there they allow seller-financing?

3. I've got to assume that there are plenty of investors out there with Fannie Mae multifamily loans that used private money for the purchase. How is seller-financing that different, or is private money not allowed either? To be clear, I'm defining a private lender as one who's given a preferred return in exchange for their capital but no equity stake in the asset, rather than an equity partner.

Please help, and thanks in advance!